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Search Results for: going global

Recommended Policy Journals and Papers

Conservatives

This page originally appeared as a category of “Supporters,” alongside other compendiums of carbon-tax supporters such as Public Officials, Thought Leaders, and Scientists & Economists. In 2019 we moved it to “Politics,” signaling the reality that the U.S. conservative movement today is almost completely devoid of supporters of meaningful climate action, much less robust carbon taxing.

Outspoken climate blogger David Roberts skewered the April 2024 Benji Becker essay noted in the text. Sadly, his critique is spot-on.

Confirmation of this sad fact appears almost daily in newspapers and other media. A particularly poignant instance was an April 2024 NY Times guest essay by one Benji Backer, founder and executive chair of the American Conservation Coalition.

The essay, grandiosely titled I’m a Young Conservative, and I Want My Party to Lead the Fight Against Climate Change, neither acknowledged conservatives’ sabotaging of climate action throughout the current century nor offered a single original or innovative policy solution — not even a revenue-neutral carbon pricing program such as fee-and-dividend, which is sometimes optimistically termed a carbon tax that “conservatives could love” for offering Pigovian taxation in a non-government-expanding form.

Somewhat similarly, a January 21, 2024 Washington Post story, N.H.’s primary pushed the GOP to fix acid rain. Climate change is another story., contrasted 1988 Republican presidential candidates vowing aggressive action against acid rain emissions from Midwestern power plants, with 2024 G.O.P. candidates disparaging or outright ignoring questions about combating climate change:

George H.W. Bush promised to restore his party’s conservation ethic and curtail pollution. His top competitor, Senate Republican leader Bob Dole, vowed to quickly pass an acid rain bill. The state’s voters and its Republican governor, Gov. John H. Sununu, had elevated the issue before the primary vote that helped propel Bush to the White House, where he followed through by signing legislation that has curtailed acidity in New Hampshire by 84 percent to date.

Now, however, as New Hampshire faces the much broader threat of climate change, Republican candidates in the state for Tuesday’s primary are barely mentioning the issue — and when they do, it is often to play it down.

Haley advocated pulling out of an international climate deal as President Donald Trump’s ambassador to the United Nations; she has said “man-made climate change is real, but liberal ideas would cost trillions and destroy our economy.” Trump calls climate change a “hoax.” Florida Gov. Ron DeSantis has said he supports efforts to address the impact of hurricanes and flooding, but he rejects “the politicization of the weather.”

Republican Gov. Chris Sununu, the son of the former governor, said in an interview that he sees no comparison between dealing with acid rain and climate change.

Climate change is a completely different story,” the younger Sununu said. “There’s a lot of politics behind that kind of socialistic approach, that green New Deal type stuff that costs trillions of dollars.”

Nevertheless, from time to time Republican and other conservative-identifying office-holders express support for some form of carbon pricing. Such expressions tend to be tentative and vague.

Opening 9 paragraphs, verbatim, from “Delay as the New Denial: The Latest Republican Tactic to Block Climate Action,” by Lisa Friedman & Jonathan Weisman, July 22, 2022. Emphasis added, link in text.

Tellingly, not one of the 50 Republican U.S. Senators supported even a single element of President Biden’s 2021-2022 Build Back Better climate-investment program, either at the outset or in any of its increasingly stripped-down versions. In July 2022, NY Times climate reporter Lisa Friedman and congressional correspondent Jonathan Weisman distilled this monolithic resistance in a front-page story, Delay as the New Denial: The Latest Republican Tactic to Block Climate Action, which we’ve excerpted in the text-box at right.

It paints a dismal picture, with Senators Lindsey Graham (R-SC) and Mike Crapo (R-ID) uttering counterfactual and nonsensical word salads, respectively.

Notably, and unfortunately, the Times story granted Capitol Hill Republicans a convenient out: saying “that they believe that … market forces would somehow develop solutions to the carbon dioxide that has been building in the atmosphere, trapping heat like a blanket around a sweltering Earth,” without challenging them to say how stiff a carbon tax they would support or why they won’t support one at all.

Expressions of support for carbon pricing by Republican / Conservative office-holders

Nineteen Republican members of the Utah legislature declared support for the carbon-fee-and-dividend approach to carbon taxing in a June 4, 2021 op-ed in Salt Lake City’s Deseret News, Republicans Need to Engage in Climate Politics. The op-ed is a classic expression of free-market ideology on climate and carbon pricing, most notably in this passage:

Emissions can be cut either with regulations, incentives or price signals. Regulations are heavy-handed and growth-inhibiting. They burden the economy, they cost American jobs, and they end up exporting our emissions to other countries. Incentives can work, but they let government choose the winners and losers, and too often end up becoming permanent entitlements. We believe the best way to cut emissions is with a price signal to the private sector, which lets competition and innovation find the solutions.

We support a carbon dividends approach that puts a fee on carbon emissions and returns all the money to the American people in dividend checks. This approach does not require heavy-handed government oversight. The fee gives the markets an incentive to move to cleaner technologies, while the dividend protects families from the effect of higher energy prices. Most families should come out financially ahead, and they will be rewarded for reducing emissions however they choose. All will benefit from the cleaner air that will result from these policies. (emphases added)

It should be said that those “heavy-handed, growth-inhibiting” regulations also improve air quality, even if less efficiently than carbon pricing. Moreover, even perfect pricing (full cost-internalization of climate and air pollution damage) won’t by itself overcome deep-seated market barriers such as split incentives and deficient infrastructure that holds back climate solutions such as electric vehicles (inadequate charging) and bicycling (danger from motorists). Carbon pricing on its own won’t eliminate climate pollution. Also missing from the op-ed was the size of the proposed carbon fee; clearly, a $20/ton carbon fee and a $15/ton fee that ramps up by $10/ton each year would be vastly different in impact.

Nevertheless, the statement wasn’t aimed at Salt Lake City — the signatories aren’t seeking a state carbon fee. Rather, it was aimed at Utah’s Republican senators, notably Sen. Mitt Romney, who from time to time has signaled openness to some form of carbon price. It’s a good start.

Former Congressmember Bob Inglis (R-South Carolina): A 2023 update

Bob Inglis, a mild-mannered, plain-spoken but steely South Carolina Republican who served six terms in Congress in the late nineties and aughts, has earned his own section on this page (see further below) for his long-time advocacy of a U.S. carbon tax.

A new (January 2023) piece by Inglis in The Hill, Dancing around the obvious climate solution, merits pride of place here for its unambiguous call for a U.S. carbon tax, notwithstanding that its basic pitch — a federal carbon tax of unspecified magnitude, with the revenues recycled through reductions in federal payroll taxes on wages — is completely unchanged from 2008.

“[W]hat if we paired a carbon tax with a cut in payroll (F.I.C.A.) taxes, exercising the right of self-governing people to change what we tax?,” Inglis asks. “Such a tax swap requires trust, and that trust will come only if Republicans and Democrats work together.”

Inglis’s Hill post specifies two opportunities for the two parties to build trust. One is to negotiate and enact permitting reform to expedite construction of transmission lines and other clean-energy accoutrements from the 2022 Inflation Reduction Act. The other is to enact a U.S. version of the pending European Union carbon border adjustment mechanism (CBAM) that could incentivize other countries to enact carbon taxes to forestall other countries from taxing their exported products for above-average embodied carbon content.

Inglis’s faith in both free enterprise and the party whose primary he lost in the 2010 Tea Party season is boundless, as his Hill peroration shows:

Our ability to govern ourselves is at the heart of who we are as Americans. We can decide to untax some form of income, to put a tax on carbon dioxide instead and to apply that tax to imports. That would get the world “in” on solving climate change, and accountable free enterprise would deliver innovation at scale and fast.

Unfortunately, the post-Tea Party version of the Republican Party now in control of the House of Representatives is, by nearly all accounts, more interested in beating up on Democrats than in working with them, and more concerned with holding power than deploying it for the common good. We wish Inglis — a lovely man, from our meetings with him — well.

Sen. Mitt Romney (R-Utah)

Utah’s junior United States senator, Mitt Romney, was formerly governor of Massachusetts (2003-2007) and Republican candidate for president (2012), as well as a successful businessman. His generally moderate record as governor of Massachusetts, along with some striking departures from right-wing Republican orthodoxy, as in voting to convict President Donald Trump in both impeachment trails (2020 and 2021) and marching in a Black Lives Matter protest (2020), have led some observers to believe that Sen. Romney might someday support carbon-pricing legislation in Congress.

In America Is in Denial, an article published in The Atlantic in July 2022 — on Independence Day, in fact — Romney decried what he called “our national malady of denial, deceit, and distrust.” He also lamented President Biden’s inability to “break through” that malady. “Too many Americans,” he wrote, “are blithely dismissing threats that could prove cataclysmic.” In Romney’s telling, those dismissed threats included climate change.

Senators Mitt Romney & Joe Manchin, March 30, 2022, Washington Post photo by Jabin Botsford.

Of course, one way that Sen. Romney could have helped Pres. Biden break through that national malady of distrust was by offering his tie-breaking vote in favor of the administration’s ambitious, climate-oriented Build Back Better legislative package. Then again, Build Back Better, a classic “big government”-style program that Republicans habitually abjure, save for military, policing and fossil fuel-related measures, wasn’t the kind of measure a traditional Republican like Romney would readily support. Carbon pricing, however, is policy of a different stripe. Not only is it said to be “market-based” (here at CTC, we prefer to call carbon pricing a market corrective), it can also be rendered as a revenue-neutral policy that won’t expand government, either as a tax swap or via a carbon-dividend approach.

And from time to time, Romney has evinced interest in carbon pricing. In October 2021, Utah’s flagship paper, Deseret News, quoted him telling the libertarian-oriented Milken Institute that “There is only one change that dramatically affects the amount of global emissions and that is a price on carbon.” Romney went on to say that “They (Democrats) talk about like this is the holy grail. And they know it is the only thing that really makes a difference. But they are not planning on doing it in reconciliation and I do not understand why.” The same Deseret News article also had Romney telling the paper that, while he “said he is not a fan of the reconciliation measure, [he] said it at least ought to include a tax on carbon.”

Fine rhetoric, but readers should note two things before they get carried away. First, in his remarks Romney appeared to be primarily touting “border carbon adjustments” that would tax imports of commodities manufactured with high emissions, rather than economy-wide U.S. carbon pricing. Second, Romney never apparently tried to corral fellow Republican senators to join his putative pro-pricing position. He has never introduced carbon-pricing legislation, nor has he co-sponsored any of the raft of carbon pricing bills introduced by Democratic counterparts such as Sen. Sheldon Whitehouse.

While we don’t know the point of Romney’s game, it doesn’t seem wise to construe occasional professions of interest in carbon pricing as genuine support.

American Enterprise Institute staffer touts idea of carbon tax (January 2022)

The American Enterprise Institute is the corporate right’s avatar of the established economic order — a reliable, conventional source of policy analysis in support of expanding economic production, limiting taxation, and deregulating U.S. health, safety and environmental practices.

In the heady days of 2006-2008, AEI published a steady stream of papers backing carbon taxes as a way of reducing carbon emissions without the presumed heavy hand of government regulations, standards and subsidies. (Several of these are referenced at the end of this long entry.) Beginning in 2010, however, with the ascension of the Tea Party and the abandonment of the climate cause by the vast majority of Republican elected officials, AEI became less voluble in supporting meaningful climate policy including carbon pricing.

To be sure, some AEI staffers did post pieces expressing positive words about carbon taxing, as a CTC friend reminded us with this set of links: 2013, 2014, 2017, 2017, 2018, 2019, 2021 and 2021. But these were largely academic and apolitical, a pattern maintained in early January (2022) with Addressing climate change and reforming the tax code with a carbon tax, by AEI senior fellow Kyle Pomerleau. The post covers the usual bases: economists love carbon taxing’s efficiency; the tax’s “natural” regressive bent makes it a tough sell to the left; more than two dozen countries have some sort of carbon tax; like all taxation, a carbon tax would cut into economic output; but there are various workarounds, so who knows, a carbon tax might some day come into being.

Yet the piece is bloodless, context-less and, in our view, not worth much attention. It’s stunningly conventional and strikingly lacking in urgency. It does not mention the exploding economic (and human) costs of climate change here and abroad, the rising geopolitical stakes, the vast health co-benefits of reducing and retiring fossil fuels. Politics are not discussed, including the unanimous refusal of the Republican Senate conference to back any of President Biden’s climate agenda.

What’s the purpose of Pomerleau’s post? If we had to guess, we’d say that AEI, mindful of the American public’s demand for climate action (fully one-third of Americans declared themselves “alarmed” over climate, in the most recent Yale – George Mason U. poll, last September), figured that an anodyne post about the hypothetical merits of carbon taxing was a good way to position themselves to the left of 2022 G.O.P. neanderthalism. We’ll happily revise our opinion, the minute the Institute comes out swinging for a specific bill embodying a non-trivial carbon tax.

NY Times: A growing number of Republicans are working to address climate change (June 2021)

The above-titled article, by Times national climate reporter Lisa Friedman, reads almost as a parody, especially its headline, variants of which have been appearing like clockwork in American newspapers for a decade or more. Its peg: a “clandestine” meeting organized by Rep. John Curtis (R-UT) at which “24 Republicans gathered in a ballroom of the Grand America Hotel in Salt Lake City where they brainstormed ways to get their party to engage on a planetary problem it has ignored for decades.”

The story’s barely newsworthy element was Rep. Curtis’s announcement of a “Conservative Climate Caucus” aimed at educating other Republicans about climate change and “developing policies to counter ‘radical progressive climate proposals.’” Thirty-eight Republican House members have reportedly joined.

The proposed solutions, which Friedman reported in a companion story, Some Republicans call for a coherent climate strategy, were the usual Republican mishmash: tree planting, promotion of nuclear power, investment in nascent technologies to capture CO2 emissions from power plants,” which individually and in combination will do little to actually draw down greenhouse gases from the atmosphere,” she noted. Friedman also pointed out that neither the new caucus nor the Republicans assembled in Salt Lake City offered any specific targets for cutting emissions.

NY Times: G.O.P. Shifts on Climate, but Not on Fossil Fuels (August 2021)

Judging from the headline, this story, from Aug. 13, 2021, may have been an attempt by the Times to fix the one above from June, by clarifying that the dawning public acknowledgment of the reality of climate change by some Senate, House and statehouse Republicans isn’t accompanied by support of meaningful policies to forestall or mitigate it. Here are the lede grafs:

After a decade of disputing the existence of climate change, many leading Republicans are shifting their posture amid deadly heat waves, devastating drought and ferocious wildfires that have bludgeoned their districts and unnerved their constituents back home.

Members of Congress who long insisted that the climate is changing due to natural cycles have notably adjusted that view, with many now acknowledging the solid science that emissions from burning oil, gas and coal have raised Earth’s temperature.

But their growing acceptance of the reality of climate change has not translated into support for the one strategy that scientists said in a major United Nations report this week is imperative to avert an even more harrowing future: stop burning fossil fuels.

Instead, Republicans want to spend billions to prepare communities to cope with extreme weather, but are trying to block efforts by Democrats to cut the emissions that are fueling the disasters in the first place.

[Emphasis added. Note that the headline above is taken from the print edition; the digital headline is the more anodyne “Amid Extreme Weather, a Shift Among Republicans on Climate Change.”]

Still, the August story noted helpfully, and accurately, that while “A few Republicans, like Senator Mitt Romney of Utah and Lindsey Graham of South Carolina, have said they support charging companies for the carbon dioxide they generate, a strategy that economists say would create a powerful incentive to lower emissions … neither man is championing such a measure with any urgency.” In other words, counting on Republicans to climb aboard the carbon tax or price train in 2021 is a fool’s errand.

David Roberts: “Climate change is intrinsically insulting to conservative values.” (April 2019)

A catalyst for this change was David Roberts’ April 2019 post, Don’t bother waiting for conservatives to come around on climate change. (Emily Atkins posted a briefer but similarly pitched piece on May 8 at The New Republic, The Republicans Are Dead to Planet Earth.) Roberts grouped right-wing / Republican expressions of climate policy interest into three approaches: associations, libertarian and innovation. Each was found wanting:

The “associations approach” attempts to identify existing conservative identities, subgroups like veterans or Catholics, that might be persuadable on climate. None of these efforts have succeeded on any appreciable scale.

The “libertarian approach” pitches climate solutions amenable to fiscal conservatives, like carbon “tax and dividend” systems that don’t grow the size of government. Despite the boundless faith many have invested in this approach, it hasn’t yielded much either.

The “innovation” approach seeks to narrow in on climate policies that overlap with existing conservative interests, which amount, as I wrote in this post, to subsidies for fossil fuel companies, for their research on how we can keep burning fossil fuels. Oh, and nuclear.

In his post Roberts also drew on a range of research, including demographic analysis of America’s “big sorting” into urban vs. rural, and Jonathan Haidt’s “moral foundations” theory, to argue that “climate change is intrinsically insulting to conservative values.” His diagnosis: “The populace needs to be made less conservative.”

FiveThirtyEight: “Why The Republican Party Isn’t Rebranding” (April 2021)

In an April 2021 post, Why The Republican Party Isn’t Rebranding After 2020, FiveThirtyEight political analyst Perry Bacon Jr. listed five dynamics that he believes are keeping the G.O.P. from altering course, despite losing the House, Senate and White House in 2020 and being implicated in the violent Jan. 6 insurrection:

  1. The party’s core activists don’t want to shift gears.
  2. Trump is still a force in the party.
  3. Republicans almost won in 2020.
  4. Republican voters aren’t clamoring for changes.
  5. There aren’t real forces within the GOP leading change.

Bacon writes that “The collective decision of conservative activists and Republican elected officials to stay on the anti-democratic, racist trajectory that the GOP had been on before Trump — but that he accelerated — is perhaps the most important story in American politics right now.”

His essay is an attempt to understand why. We recommend it highly for anyone looking for a break from Republicans’ virtually monolithic anti-climate stance, anytime soon.

The Last House Republican to Back a Carbon Fee

In Nov 2018, House Republican Francis Rooney (FL-19) joined six Democratic Congressmembers including Rep. Ted Deutch, co-founder of the Climate Solutions Caucus, in co-sponsoring the Energy Innovation and Carbon Dividend Act. EICDA would impose an initial “upstream” charge of $15 per ton of CO2 from combustion of fossil fuels, with the charge increasing annually by $10 per ton. All of the revenues would be placed in a trust fund whose proceeds would be returned as “dividends” to U.S. households.

The EICDA embodied the fee-and-dividend approach espoused by Citizens’ Climate Lobby and long supported by the Carbon Tax Center, climate scientist-advocate James Hansen and others. The carbon charge embodied in the EICDA is aggressive, taking just nine years to surpass $100/ton (though it could be said that onrushing climate events such as ice caps melting and Australian and western U.S. wildfires, warrant a steeper trajectory). In this sense, the bill’s co-sponsorship by Rep. Rooney, a Republican, was a major positive step.

But not a breakthrough. Rep. Rooney never actively fought for his bill. EICDA was barely visible on his Web site; it appeared perfunctorily on a hard-to-find page for co-sponsored bills, in contrast to Rep. Deutch’s site, which included both a press release for the bill and a YouTube video forcefully outlining its rationale for his constituents and the nation as a whole. Based on a Google search and his Web site, Rep. Rooney generally refrained from touting the bill and instead limited his climate advocacy to broad generalities.

Rooney’s reticence about championing his fee-and-dividend bill was in stark contrast to GOP Rep. Justin Amash’s willingness to buck Republican orthodoxy in calling for impeachment of President Trump. In any event, as of Jan. 2021 Rooney is no longer in the House. He retired from politics in 2020.

George P. Shultz

Stalwart Republican and conservative elder statesman George P. Shultz championed revenue-neutral carbon-taxing in the decade leading up to his death on Feb. 7, 2021 at age 100. In op-eds, in public presentations, and in his service on the advisory boards of Citizens Climate Lobby (CCL) and the Niskanen Center, Shultz advocated for U.S. adoption of the “fee-and-dividend” form of carbon taxing that distributes all carbon tax revenues equally (“pro rata”) to U.S. households. The idea is to instill the price incentive of a carbon tax throughout the economy without increasing the size and reach of government.

Shultz’s conservative pedigree and illustrious bio — he served Republican presidents Nixon and Bush (41) in four Cabinet-level positions: budget director, labor, treasury and state — lent gravitas to his support for carbon taxing, as the Niskanen Institute’s Joseph Majkut intimated in his affectionate Feb. 10 (2021) tribute, Shultz, Conservatism and Carbon Pricing:

On February 7, we lost one of our most revered and beloved statesmen, George Shultz. His absence is a loss for both the country and the world, and his legacy of service and diligence will be remembered. Shultz’s lifetime of service was an example of patriotic and conservative leadership, not least in his support for immediate and forceful action against climate change.

Shultz was no progressive green. He was a life-long Republican and a conservative. After military service and graduate studies, he joined the faculty at the University of Chicago, and was influenced by renowned free-market economists Milton Friedman and George Stigler. Steeped in free-market thinking, he served in the Nixon Administration, returned to the private sector, and then served in the Reagan Administration as Secretary of State, helping the President forge a relationship with the Soviet Union and free half a continent from communist rule. Decades later, he would embrace a carbon tax as a prudent, even a conservative, response to climate change. (emphases added)

For a sampling of Shultz’s opinions on carbon taxing, see Stanford’s George Shultz on energy: It’s personal, published in the Stanford Report, July 2012. Following is an excerpt from Shultz’s op-ed, How to Gain a Climate Consensus, in the Washington Post, Sept. 5, 2007:

The use of economic incentives (caps and trading rights, and carbon taxes) is essential to avoid disastrously high costs of control. The cap-and-trade system has been highly successful in reducing sulfur dioxide emissions by electricity utilities in the United States. That system relies on a scientifically valid and accepted emission-measurement system used by a clearly identified and homogeneous set of utilities. Fortunately, such a careful system of measurement exists for a viable greenhouse gas regimen. The product of collaboration between the World Resources Institute and the World Business Council for Sustainable Development, these standards for accounting and reporting greenhouse gases should be duly understood and adopted. Even with clear units of account, however, large problems arise as the coverage and heterogeneity of the system grow. And for trading across borders, the system needs to be accepted among the trading partners. Scams are easy to imagine. No nation should be allowed to trade without a verifiable, transparent system of measuring and monitoring of reductions, and holding emitters accountable. In many respects, a straight-out carbon tax is simpler and likelier to produce the desired result. If the tax were offset by cuts elsewhere to make it revenue-neutral, acceptability would be enhanced.

Unfortunately, Shultz left few disciples. His death leaves his fellow fee-and-dividend proponent (and fellow former Republican Secretary of State) James Baker, who serves on the board of the Climate Leadership Council, as the lone prominent Republican voice for climate action via carbon taxing.

To our knowledge, none of the 20-odd sitting Republicans currently listed as members of the Climate Solutions Caucus has made a single public utterance in support of carbon taxing since at least the 2018 midterm elections. Only two Republican caucus members voted in Jan. 2021 to impeach then-President Trump for inciting the Jan. 6 Capitol invasion: Rep. Fred Upton (R-MI-06) and Rep. Adam Kinzinger (R-IL-16). Indeed, among the caucus members are some House Republicans who voted against certifying Joe Biden’s electoral college win on Jan. 6, including Rep. Lee Zeldin (R-NY-01), Rep. Elise Stefanik (R-NY-21), and the especially unhinged Rep. Matt Gaetz (R-FL-01).

Conservatives’ fragility on climate action

There may be no more compelling climate apostate than Jerry Taylor, an adamant climate denier during his two decades’ tenure at the Cato Institute but, since 2014, a vigorous proponent of climate action at the Niskanen Center, the think tank he founded that year.

What Changed My Mind About Climate Change?, Taylor’s May 2019 post at a new center-right opinion site, The Bulwark, tellingly recounts his conversion from denier to advocate. What is perhaps most striking about it, however, is this passage from Taylor’s email blast announcing the post:

[M]y experience is that the risk management argument resonates more powerfully with conservative audiences than does grabbing them by the lapels and screaming about the science (as warranted as that may be). Accordingly, please forgive me as I suggested more agnosticism [in my Bulwark post] than I truly feel about the strength of the scientific case for action. We need to give conservatives an out to embrace climate action without also forcing them to publicly confess that Al Gore was right all along (even though he was). (emphasis added)

The sad truth is that Taylor is probably right.

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(The remainder of this page, written and posted between 2014 and early 2017, is retained for historical value.)

Some conservatives have been willing to discuss and even endorse carbon taxes as the cornerstone of climate policy that fits within their principles of free markets and individual choice, though in many instances this support comes heavily hedged. At this writing (May 2017), there are three prominent loci of support for — or, at least, openness to — carbon taxing among U.S. conservatives:

  1. A March 2017 resolution “expressing the commitment of the House of Representatives to conservative environmental stewardship,” signed by 20 House Republicans.
  2. The Climate Leadership Council, which in Feb. 2017 issued “The Conservative Case for Carbon Dividends,” a policy brief signed by Republican senior statesmen George Shultz and James Baker, among others.
  3. The Niskanen Center, a libertarian think-tank headed by one-time climate denier Jerry Taylor that has become a beehive of thoughtful, analytical carbon tax advocacy rooted in free-market ideology.

This page summarizes recent activity by these groups, which flies in the face of the climate science denialism that has become a hallmark of the Republican Party, prior to and during the Trump Administration.. It also compiles statements from conservative commentators and other right-leaning public personages supporting carbon taxing — often but not exclusively as a potential revenue source to reduce the U.S. budget deficit or to finance reductions in other taxes such as the Corporate Income Tax.

Before we dive in, we have three survey articles to recommend.

One is Ben Adler’s 2015 post in Grist dissecting three contrasting streams of thought on climate policy among so-called conservative policy intellectuals. Adler’s thumbnails of positions on climate policy and economics voiced by prominent conservatives including Ross Douthat, Charles Krauthammer, Reihan Salam, Greg Mankiw and 11 others make for a fascinating and informative read.

Another is Ted Halstead’s Nov. 2015 Atlantic article, The Republican Solution for Climate Change. Subtitled “Republicans have the ability to offer a market-based solution to climate change, so why aren’t they doing it?,” the article is more an exploration of why the GOP should support carbon taxing than an explanation of why they don’t. Halstead founded the Climate Leadership Council a year later.

The third is a penetrating March 2017 story in Yale Environment 360 (published at the college’s School of Forestry & Environmental Studies), Climate Converts: The Conservatives Who Are Switching Sides on Warming.

1. 2017 House G.O.P. Climate Resolution

In March 2017, 17 House Republican members re-issued a 2015 resolution “expressing the commitment of the House of Representatives to conservative environmental stewardship.” (Three more signed on in May.) In a blog post in March, we called the resolution “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.”

Map shows the 17 GOP House members who signed the March 2017 resolution discussed in text. Their ranks grew to 20 in May.

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 ten new signers — counting the three who signed the resolution in May 2017 — 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 Republicans only, a not unreasonable way to strike a small flame that would not be overshadowed by solid Democratic support for climate action. The 20 Republican House signers hail almost evenly from Trump states (nine signatories) and Clinton states (eleven), with six from New York, three each from Pennsylvania and Florida, and the other eight from eight other states. Only one represents a heartland state — Don Bacon, who just won election to the House from Nebraska — though three others are from the mountain West: Mark Amodei of Nevada, Mia Love of Utah and Mike Coffman of Colorado. (See map.)

2. Climate Leadership Council

Editorial endorsements of the CLC’s carbon tax proposal span a broad ideological range.

Far and away the greatest attention-getting development in carbon taxes this year (2017) was the emergence of the Climate Leadership Council and its Feb. 2017 brief, The Conservative Case for Carbon Dividends. The paper was issued under the signatures of Republican icons James Baker and George Shultz, both of whom had served Republican presidents as secretaries of state and treasury and who personify an erstwhile (pre-Bush 43 as well as pre-Trump) Republican establishment.

The carbon tax outlined in the council’s brief begins with a $40/ton CO2 fee, which would rise over time at an as-yet unspecified rate. One hundred percent of the carbon revenues would be returned to households as dividends, making the proposal the first Republican-branded carbon tax employing the dividend approach championed by the Citizens Climate Lobby, rather than dedicating the revenues to cutting corporate income taxes.

CO2 reductions from CLC proposal will turn on escalation rate from initial $40/ton.

CTC endorsed the proposal on the date it was issued, including the council’s proposed swap” rescinding the Obama administration’s Clean Power Plan in favor of the carbon tax. “The important work of the Clean Power Plan was largely completed anyway,” we said, pointing out that roughly 80 percent of the plan’s targeted reduction in electricity-sector emissions for 2030 had already been achieved by the end of 2016. “The proposed carbon tax is the logical and necessary next step,” we said, “instilling incentives throughout the U.S. economy to replace fossil fuels with clean energy.”

Details about CLC’s proposal may be found on their site.

CLC renewed its call for a $40/ton carbon fee “in exchange for a rollback of Obama-era climate rules” in a May 9 New York Times op-ed, The Business Care for the Paris Climate Accord, co-authored by Shultz and Halstead.

3. Niskanen Center

A signal development since 2014 has been the emergence of the Niskanen Center as a leader in conservatives’ (and especially libertarians’) interest in carbon taxing.

The center’s founder-director, Jerry Taylor, was an energy policy analyst at the Cato Institute, where he helped forge Cato’s unflinching climate denialism (“I used to write skeptic talking points for a living,” he said in an April 2017 interview) until an immersion in climate science led him to a change of heart and a 180-degree turnaround on climate.

In March 2015, the Niskanen Center launched a full-scale assault on conservative obstruction of climate policy with a provocative paper by Taylor, The Conservative Case for a Carbon Tax. The paper argued that if conservative denial of climate science is grounded in ideological aversion to command-and-control regulation, as proposed in EPA’s proposed Clean Power Plan, conservatives should embrace and promote a revenue-neutral carbon tax as a more efficient, less burdensome, “free market” alternative and do so soon, because once established, EPA regulations will be almost impossible to uproot.

Taylor followed that paper with a series of bold blog posts further articulating his proposal, including these two in March 2015, Could Carbon Taxes Deliver a Double Dividend? and Debating the Carbon Tax, writing in the latter:

[C]onservatives ought to abandon their “just say no” policy towards addressing climate change. Global warming is real, industrial emissions are the main cause, and warming imposes risk that warrant a policy response… [C]arbon taxes are a far more efficient means of controlling greenhouse gas emissions than command-and-control regulation.  [A] carbon tax at the levels presently discussed in Washington would not unduly burden the economy, and that’s particularly true once we consider the (non-climate) environmental benefits that would follow from the tax as well as the benefits of any offsetting tax cuts.

Taylor’s most recent (April 2017) paper, Debating Carbon Taxes With Oren Cass (And Bill Gates), is a lively and thoughtful survey of energy developments worldwide, particularly in the developing nations. In the lengthy (5,000 words) paper he tackles various precepts of conservative opposition to climate policy, e.g., unilateral U.S. action on climate is futile and self-defeating, and intentional abandonment of fossil fuels will consign poor nations and people to perpetual poverty. The paper is factual and filled with encouraging data on economic and technical progress in the solar and wind industries, and the clean-air co-benefits of phasing out coal, oil and gas.

Politicians

(Former Rep.) Bob Inglis, republicEn

During the fifth of his six terms as a member of Congress from South Carolina (Republican, 4th CD), in 2008, Bob Inglis introduced a bill proposing a revenue-neutral carbon tax whose revenue would reduce payroll taxes. Since leaving office in 2010 — he was primaried out by Tea Party favorite Trey Gowdy — Inglis has become a vocal advocate of carbon taxes as a free-market conservative alternative to regulations, subsidies and cap-and-trade systems. His organization republicEn unabashedly calls on “Conservatives [to] unify America to thwart climate warming.”

Inglis sounded a strongly optimistic — some might say naive — note in a March 2017 interview with Ensia.com, when asked whether the Trump administration might warm to the Baker-Shultz carbon tax proposal enunciated in Feb. 2017 by the Climate Leadership Council (see description above):

I think we could see Donald Trump embracing this if he could think of saying it this way at one of his rallies: “America is going to act first. We’re going to lead the world to a solution on climate change. We’re going to put a tax on carbon dioxide. We’re going to offset it with a dividend to the people or by other tax cuts and then we’re going to impose it on Chinese goods and everybody else’s goods unless they’ve got the same tax on carbon dioxide. If they want to sue us in the [World Trade Organization], well, I’m used to being in court. So, we’ll meet you there and beat you there. And as we beat you, you make your own decision to whether you want to put the same price on carbon dioxide at home or whether you want to keep on paying our tax on entry. Either way it’s fine with us.”

I know [passage of a carbon tax] seems improbable or even impossible. It looks impossible, but I think it’s going to go to the inevitable without ever passing through the probable.

Inglis consistently points to efficient markets as a bedrock conservative principle, arguing that for markets to work, fossil fuel prices must reflect true costs. In a January 2016 piece in the Daily Caller advocating a revenue-neutral carbon tax, he wrote:

Conservatives need a solution which doesn’t grow government, which trusts in the power of accountable marketplaces to deliver innovation and which empowers individuals in the liberty of enlightened self-interest to make their own decisions. Eureka!

Inglis also unabashedly praises climate science as a window into “the intricacies of this glorious creation.” That quote and these that follow are from an interview w/ Inglis published in the Dallas Morning News on August 29, 2014 under the headline, “Q&A: Bob Inglis on the conservative case for a carbon tax.”

Q: Isn’t a tax government intervention? Make a conservative case for a tax.

A: There is a role for government. It is simply being the honest cop on the beat that says to all fuels that you have to “own your own costs” so that the market can judge your product. We should eliminate all the subsidies. No more Solyndras. No more production tax credits for wind. No more credits for electric vehicles. No more special tax provisions for oil and gas. Level the playing field. The big challenge is reaching fellow conservatives and convincing them that the biggest subsidy of all may be to belch and burn into the trash dump in the sky — for free. That lack of accountability may be the biggest subsidy of them all.

Q: A lot of conservatives don’t accept climate change. Why do you?

A: I do because there is every reason to celebrate the science. Science is the process of discovery of the intricacies of this glorious creation. Is science settled? No. Science is never settled and we will never know all of the glories of the creation. But what we are discovering in climate science is that there is a risk that we can avoid from the creative innovation that comes from free enterprise. We have a danger and an opportunity. As a conservative, I say what a great opportunity to create wealth, innovate and sell innovation around the world.

Q: So why have conservatives rejected the science?

A: It has been presented as doom-and-gloom, this apocalyptic vision. Denial is a pretty good coping mechanism. The second reason is the assumed solution is a bigger government that taxes more, regulates more and decreases liberty. Given that, conservatives doubt whether we have a problem.

The Dallas Morning News piece has other revealing quotes as well. For more about Inglis, see The conservative case for a carbon tax (Houston Business Journal, 2/20/14), and Could Republicans ever support a carbon tax? Bob Inglis thinks so (Washington Post, 3/14/13).

Former U.S. Secretary of State George Shultz

(Material in this sub-section should be viewed as precursors to Shultz’s co-sponsorship of the Climate Leadership Council’s 2017 issue brief discussed in detail above. Note that Shultz was one of the 32 signatories to the Carbon Tax Center’s November 2015 Call to Paris Climate Negotiators to Tax Carbon.)

Secretary Shultz, who served Pres. Nixon as Secretary of Labor and Treasury and OMB Director, and Pres. Reagan as Secretary of State, is a vocal supporter of the fee-and-dividend approach to carbon taxing.

In 2013, he and Nobel economics laureate Gary S. Becker published Why We Support a Carbon Tax in the Wall Street Journal. Their op-ed is a compelling and elegant articulation of the case for a revenue-neutral and steadily rising carbon tax.

George Schultz bouquet in Friedman column _ Stuff Happens to the Environment, Like Climate Change _ 7 Oct 2015

Tom Friedman writing in the New York Times, Oct 7, 2015

In October 2015, New York Times columnist Thomas Friedman contrasted Shultz’s climate concern to the denialism of leading GOP presidential hopefuls. An excerpt appears to the right.

In July 2014, Shultz participated in an M.I.T. Climate Lab hour-long Webinar on carbon pricing and taxing, alongside former Reps. Bob Inglis (see above) and Phil Sharp (D-IN), president of Resources for the Future. In a bravura performance, Shultz articulated the rationales for a carbon tax (and against cap/trade), including cap/trade’s price volatility and vulnerability to market manipulation, a carbon tax’s straightforwardness, and the success (and revenue-neutrality) of British Columbia’s carbon tax, as well as the general power of pricing and the insurance value of a carbon tax.  Audio of the Webinar is available via this link.

And in March 2015, Shultz penned “A Reagan approach to climate change” (Washington Post), reminding readers of President Reagan’s bold response to scientific alarm about thinning of the Earth’s ozone layer which led to the Montreal Protocol, a treaty phasing out ozone-depleting chemicals. Shultz urged leaders to follow Reagan’s example by setting aside doubts and taking out a climate insurance policy before we get “mugged by reality.” Shultz concluded that robust funding of clean energy research and development, plus a revenue-neutral carbon tax, “starting small and escalating to a significant level on a legislated schedule” would “do the trick” and are the kinds of policies Reagan would advocate to avert climate disaster.

Writers and Pundits

David Brooks, New York Times and Weekly Standard:

On the PBS New Hour (February 20, 2015), Brooks critiqued President Obama’s State of the Union address as a missed opportunity to take a bold step by proposing a carbon tax.  Pointing to bipartisan support from economists, Brooks observed that a carbon tax would “raise revenue, help the environment, and is an economic plus.”

Peter Van Doren, Cato Institute:

The one concept that all students, even those sleeping in the back of the lecture hall, learn from an introductory economics class is that prices matter… As prices increase, the quantity consumed goes down. So if fossil fuel combustion produces byproducts that cause negative health effects on third parties as well as changes in the temperature of the atmosphere, the obvious lesson from economics is to increase fossil fuel prices enough through taxation to account for these effects. Then firms and consumers will react to these prices in thousands of different ways, the net result of which is less aggregate fossil fuel combustion… [Yet] voters and their elected officials resist this simple insight and instead prefer to impose only energy efficiency standards on manufacturers of consumer appliances and automobiles. A singular emphasis on energy efficiency rather than prices has two important drawbacks. First, more efficient appliances and automobiles cost much more to achieve equivalent energy savings than a tax on fossil fuel consumption. This occurs because higher prices encourage all possible avenues of reducing energy consumption — which efficiency standards do not.

Excerpted from “When Prices Are Wrong, Markets Don’t Work,” in NY Times, “Room for Debate,” The Siren Song of Energy Efficiency, March 19, 2012.

Andrew Moylan, R Street Institute:

A conservative carbon tax has three key components: revenue neutrality, elimination of existing taxes, and regulatory reform. When combined, these policies would yield a smaller, less powerful government; a tax code more conducive to investment and growth; and the emissions reductions the law says we must achieve … [R]eform must devote every dime of carbon-tax revenue to reducing other tax rates or abolishing other taxes altogether. Turning on one revenue stream while turning off others is how we prevent growth in government… [A] $20 per ton tax on carbon dioxide emissions could generate roughly $1.5 trillion in revenue over ten years. That’s enough to allow for the complete elimination of several levies that conservatives rightly regard as structurally deficient or duplicative: capital gains and dividends taxes, the death tax and tariffs.

From How to Tax Carbon: Conservatives can fight climate change without growing government (American Conservative, 10/2/13).

Holman W. Jenkins, Jr., Wall Street Journal:

A straight-up, revenue-neutral carbon tax clearly is our first-best policy, rewarding an infinite and unpredictable variety of innovations by which humans would satisfy their energy needs while releasing less carbon into the atmosphere.

Excerpted from “Birth of a Climate Mafia,” July 2, 2014 (which, apart from this excerpt, is unrelievedly anti-climate reform).

Economists

Gregory Mankiw (Harvard): Perhaps the most widely-published advocate for higher fuel taxes in the economics profession is Gregory Mankiw, Harvard professor and former chair of the President’s Council of Economic Advisers (2003-2005), and former senior adviser to Republican presidential candidate Mitt Romney. Mankiw was one of the 32 signatories to the Carbon Tax Center’s November 2015 Call to Paris Climate Negotiators to Tax Carbon., as well as a signatory to the Climate Leadership Council’s Feb. 2017 brief, The Conservative Case for Carbon Dividends.

Mankiw made the case for a carbon tax in a forceful NY Times op-ed, One Answer to Global Warming (Sept. 16, 2007) which we discussed on our blog. His 2006 Wall Street Journal op-ed pieces (Jan. 3 and Oct. 20) are among the many lively pieces available on Mankiw’s pro-fuel-tax blog, The Pigou Club Manifesto. (Economist Arthur Pigou, 1877-1959, articulated the concept of economic externalities along with corrective “Pigovian” taxes.) On Dec. 31, 2006 Mankiw reiterated his 2006 New Year’s Resolutions from his Jan. 3, 2006 WSJ piece, including:

I will tell the American people that a higher tax on gasoline is better at encouraging conservation than are heavy-handed CAFE regulations. It would not only encourage people to buy more fuel-efficient cars, but it would encourage them to drive less, such as by living closer to where they work. I will tell people that tolls are a good way to reduce traffic congestion — and with new technologies they are getting easier to collect. I will advocate a carbon tax as the best way to control global warming.

In a Sept. 16, 2006 post to his blog, Rogoff Joins the Pigou Club, Mankiw listed some three dozen other economists and pundits who have publicly advocated higher Pigovian taxes, such as gasoline taxes or carbon taxes. The list includes, in addition to several individuals mentioned here, such notables from economics, finance and journalism as Alan Greenspan, Gary Becker, William Nordhaus, Richard Posner, Anthony Lake, Martin Feldstein, Gregg Easterbrook and Lawrence Summers. (Links are included.)

Mankiw publishes a column every six weeks in the NY Times Sunday business section. In his June 1, 2008 column, The Problem With the Corporate Tax, Mankiw wrote:

I have a back-up plan for [Sen. McCain]: increase the gasoline tax. With Americans consuming about 140 billion gallons of gasoline a year, a gas-tax increase of about 40 cents a gallon could fund a corporate rate cut, fostering economic growth and reducing a variety of driving-related problems. Indeed, if we increased the tax on gasoline to the level that many experts consider optimal, we could raise enough revenue to eliminate the corporate income tax. And the price at the pump would still be far lower in the United States than in much of Europe.

In his Jan. 22, 2012 column, A Better Tax System (Instructions Included), Mankiw wrote:

Tax Bads Rather Than Goods: A good rule of thumb is that when you tax something, you get less of it. That means that taxes on hard work, saving and entrepreneurial risk-taking impede these fundamental drivers of economic growth. The alternative is to tax those things we would like to get less of. Consider the tax on gasoline. Driving your car is associated with various adverse side effects, which economists call externalities. These include traffic congestion, accidents, local pollution and global climate change. If the tax on gasoline were higher, people would alter their behavior to drive less. They would be more likely to take public transportation, use car pools or live closer to work. The incentives they face when deciding how much to drive would more closely match the true social costs and benefits. Economists who have added up all the externalities associated with driving conclude that a tax exceeding $2 a gallon makes sense. That would provide substantial revenue that could be used to reduce other taxes. By taxing bad things more, we could tax good things less.

Although this and some other pronouncements by Mankiw concern gasoline taxes rather than carbon taxes, they could be considered bold by a close adviser to the Romney for President campaign.

Arthur Laffer (prominent economic adviser to President Reagan): In a New Hampshire Public Radio interview (10/19/11), and in “Economist Arthur Laffer proposes taxing pollution instead of income” (Vanderbilt Univ., 2/20/12), Laffer recommended a carbon tax with revenue used to cut income taxes, a swap that he argued would create jobs, improve economic output and reduce pollution. As Laffer and (then) Rep. Bob Inglis (R-SC) wrote in the New York Times (12/27/08):

Conservatives do not have to agree that humans are causing climate change to recognize a sensible energy solution. All we need to assume is that burning less fossil fuels would be a good thing. Based on the current scientific consensus and the potential environmental benefits, it’s prudent to do what we can to reduce global carbon emissions. When you add the national security concerns, reducing our reliance on fossil fuels becomes a no-brainer.

Yet the costs of reducing carbon emissions are not trivial. Climate change may be a serious problem, but a higher overall tax rate would devastate the long-term growth of America and the world.

It is essential, therefore, that any taxes on carbon emissions be accompanied by equal, pro-growth tax cuts. A carbon tax that isn’t accompanied by a reduction in other taxes is a nonstarter. Fiscal conservatives would gladly trade a carbon tax for a reduction in payroll or income taxes, but we can’t go along with an overall tax increase.

Laffer has said little about carbon taxes since around 2012, however, so it’s not clear if he currently (2017) qualifies as a carbon tax supporter.

Douglas Holtz-Eakin (American Action Forum): Holtz-Eakin, a senior policy adviser to the 2008 McCain campaign, is now president of the American Action Forum. In “Make a carbon tax part of reform effort” (Concord Monitor, 9/19/11), Holtz-Eakin argues for comprehensive tax reform to include a carbon tax so that more of the “true cost of burning a fossil fuel… in the form of air pollution, a negative impact on human health, harm to the environment or climate change [is a] component in economic decisions [such as] include whether to invest in a coal-fired power plant or a wind farm.” He suggests that carbon tax revenue be used to reduce the payroll tax, income tax and corporate tax rate. His organization, AAF, criticizes EPA regulation of greenhouse gases as costly and largely ineffective.

Irwin Stelzer (Hudson Institute): In “Carbon Taxes, An Opportunity For Conservatives” (2011) Irwin Stelzer, Senior Fellow and Director of the Hudson Institute’s economic policy studies group, wrote:

A tax on carbon… would reduce the security threat posed by the increasing possibility that crude oil reserves will fall under the control of those who would do us harm, either by cutting off supplies, as happened when American policy towards Israel displeased the Arab world, or by using the proceeds of their oil sales to fund the spread of radical Islam and attacks by jihadists.

A tax on carbon…  need not swell the government’s coffers — if we pursue a second, long-held conservative objective: reducing the tax on work. It would be a relatively simple matter to arrange a dollar-for-dollar, simultaneous reduction in payroll taxes… Anyone interested in jobs, jobs, jobs should find this an attractive proposition, with growth-minded conservatives leading the applause.

In The Carbon Tax Has Something for Everyone (National Review, Dec. 29, 2014), Stelzer observed,

We have a unique opportunity to end the rancorous debate about climate change, a debate that is poisoning the air — the political air, that is — and inhibiting progress on two fronts: progress on addressing the possibility that we are on the road to a catastrophic warming of the globe, and progress on reforming our anti-growth tax structure, which is so inequitable that it is straining the public’s belief in the fairness of capitalism and what we like to call “the American Dream.” All we need do is stop pretending that the cost of carbon emissions is certainly zero, and that regulation provides a more efficient solution than the market.

Stelzer urged the Republican leadership in Congress to integrate a carbon tax into broader tax reform.  He also pointed out that World Trade Organization rules enable a U.S. carbon tax to form the template for an effective global carbon tax structure, thereby breaking the UN climate policy gridlock.

In April 2015, writing in the conservative Weekly Standard, Stelzer reviewed and endorsed the new IMF book, “Implementing a U.S. Carbon Tax: Challenges and Debates” by Ian Parry, Adele Morris and Roberton C. Williams III.  Stelzer remarked:

This collection of 13 essays finally provides empirical data—numbers, if you are an ordinary reader rather than a policy wonk—and analyses to help us to some reasoned conclusions. The broad conclusions to be drawn are that a carbon tax would: reduce emissions, raise revenues more efficiently than the taxes it might replace, and be relatively easy to implement, “a straightforward application of basic tax principles,” in the words of the volume’s sponsors, the International Monetary Fund, the Brookings Institution, and Resources for the Future.

Most recently, in A Deal Over Climate Change, also in the Weekly Standard, Stelzer opined that the Supreme Court’s 5-4 stay of the EPA Clean Power Plan could catalyze a bipartisan agreement to substitute a carbon tax for G.O.P. denialism and Democratic regulation. The Feb 2016 post’s subhead, “Why not a carbon tax? Both sides could do a lot worse,” encapsulated Stelzer’s belief that political forces would push the two sides toward such an accommodation.

Alan Viard, Resident Scholar, American Enterprise Institute:  Former Dallas Federal Reserve economist (1998-2006) and former senior economist on the President’s Council of Economic Advisers (2003-04), Alan Viard is a regular contributor to the tax policy journal “Tax Notes.” In testimony to the Senate Finance Committee (2009), Viard explained the perverse effects of giving free allowances to polluters under cap-and-trade. When Senator Kerry asserted that “caps” are necessary to reduce emissions because polluters would “just pay” a carbon tax, Viard patiently and eloquently explained the bedrock principles of price elasticity that undergird both carbon taxes and cap-and-trade systems. Viard concluded by recommending a carbon tax with revenue used to reduce marginal tax rates.

Kevin Hassett, Director of Economic Policy Studies at the American Enterprise Institute: Conservative economist Kevin Hassett has long advocated a carbon tax as vastly preferable to costly regulations, subsidies or cap-and-trade schemes that induce energy price volatility and provide opportunities for manipulation and gaming by emissions traders. In early 2017, Hassett was named chair of President Trump’s Council of Economic Advisors.

Along with AEI colleagues Steven Hayward and Kenneth P. Green, Hassett authored “Climate Change: Caps vs. Taxes” (2007), a short and very readable article that deftly and systematically demolished the myths surrounding cap-and-trade with offsets while sketching the structure of a simple, effective carbon tax “shift.”  The authors pointed out that many of the supposed advantages of emissions caps were based on assumptions about the success of EPA’s SO2 emissions trading program for power plants which was orders of magnitude smaller and simpler than the market that would need to be established for CO2 emissions. They argued that much of the EPA program’s apparent success in reducing SO2 emissions from power plants was due to simultaneous railroad deregulation which reduced the cost of delivering low sulfur coal strip-mined in the west. And they cautioned that a CO2 cap-and-trade program would induce price volatility, feeding speculators while starving legitimate investors in alternative energy.

The article neatly described the potential for a “double dividend” obtained by tax shifting:  imposing taxes on CO2 pollution while using the revenue to reduce other distortionary taxes such as payroll, individual and corporate income taxes that dampen desirable economic activity. Hassett and colleagues suggested that such a carbon tax “shift” could improve the overall output of the economy even without considering climate benefits and thus represented a “no regrets” policy for conservatives who aren’t convinced of the danger of global warming. The article cited authoritative works by a range of leading economists including Yale’s William Nordhaus and Stanford’s Lawrence Goulder who also support carbon taxes.

Writers/Pundits

This page, featuring authors, writers and “pundits” (newspaper and magazine columnists, principally), is one of half-a-dozen compiling expressions of support for carbon taxes (or more targeted taxes, e.g., on gasoline) by notable individuals and organizations. To access other pages with different supporter categories, click on the Progress link on the navigation bar and move to the desired category.

New York Times columnists

Many of the Times’ regular editorial columnists have supported a carbon tax. See Writers & Pundits section of our Archived Supporters page for pro-carbon tax expressions by former Times columnists.

David Brooks

“Raise taxes on carbon emissions,” urged The Times’ most right-leaning columnist, on Nov. 30, 2006 (Waiting To Be Wooed). Although Brooks favored using the tax revenues to make tax cuts on dividends and capital gains permanent, a stance at odds with CTC’s progressive-tax-shift position, he at least grasped the need to reflect climate-change costs in fuel prices.

In 2009, Brooks wrote:

A crusade for economic self-restraint would have to rearrange the current alliances and embrace policies like energy taxes and spending cuts that are now deemed politically impossible. But this sort of moral revival is what the country actually needs.(The Next Culture War, Sept. 29, 2009, emphasis added).

In a commentary on the 2012 State of the Union address, Brooks chided President Obama for ignoring the Peterson Foundation’s call to “tax fossil fuels to spur innovation,” among other recommendations. (Hope, But Not Much Change, Jan. 27, 2012).

In a critique of clean-tech subsidies during the 2012 presidential campaign, Brooks wrote:

Global warming is still real. Green technology is still important. Personally, I’d support a carbon tax to give it a boost. But he who lives by the subsidy dies by the subsidy. Government planners should not be betting on what technologies will develop fastest. They should certainly not be betting on individual companies.(A Sad Green Story, Oct. 18, 2012, emphasis added.)

Paul Krugman

The Times influential economist-columnist (and economics Nobel laureate) has, curiously, shied from carbon-tax advocacy. During the run-up to the Dec. 2009 Copenhagen COP-15 session, Krugman attacked climatologist and cap-and-trade opponent James Hansen for allegedly failing to grasp that a robust permit-based emissions-control system would lead to the rising carbon price Hansen advocated. (Krugman badly underestimated Hansen’s economics acumen, in our view, as can be seen by reading any of Hansen’s pronouncements gathered on the Scientists page of this Web site or by viewing Hansen’s presentation at the Nov. 2010 Wesleyan Univ. Pricing Carbon conference.) Nevertheless, in a July, 2011 post on his Conscience of a Liberal blog, Krugman came out swinging for putting a price on carbon emissions:

Opponents of a strong policy to curb greenhouse gases tend to be fervent believers in the magic of market economies. Yet somehow their faith goes away when it comes to environmental issues. If you seriously believe in markets, you should believe that given the right incentives — namely, putting a price on emissions, through either a tax or a tradable permit scheme — the economy will find lots of ways to emit less. You should definitely not believe, as anti-environmentalists claim, that the result would be economic disaster. (The Answer, My Friend, July 19, 2011)

Thomas Friedman

His has been the most influential and persistent journalistic voice for breaking U.S. oil dependence by taxing gasoline and for addressing climate change with a carbon tax. His most recent column, The Market and Mother Nature, on Jan. 9, 2013, placed a carbon tax in the politically viable context of fiscal and tax reform:

A carbon tax would reinforce and make both strategies [deficit reduction and climate stabilization] easier. According to a September 2012 study by the Congressional Research Service, a small carbon tax of $20 per ton — escalating by 5.6 percent annually — could cut the projected 10-year deficit by roughly 50 percent (from $2.3 trillion down to $1.1 trillion).

Although a carbon tax needs to grow far faster than CRS’s hypothetical tax — which would take 13 years to double to just $40/ton — Friedman at least shows no signs of backing off his long-time carbon tax advocacy.

Friedman’s Sept. 14, 2011 column in this vein, Is It Weird Enough Yet?, was classic. Friedman set the table:

[H]ere is the Texas governor rejecting the science of climate change while his own state is on fire — after the worst droughts on record have propelled wildfires to devour an area the size of Connecticut. As a statement by the Texas Forest Service said last week: “No one on the face of this earth has ever fought fires in these extreme conditions.”

He continued:

There is only one effective, sustainable way to produce “green jobs,” and that is with a fixed, durable, long-term price signal that raises the price of dirty fuels and thereby creates sustained consumer demand for, and sustained private sector investment in, renewables. Without a carbon tax or gasoline tax or cap-and-trade system that makes renewable energies competitive with dirty fuels, while they achieve scale and move down the cost curve, green jobs will remain a hobby.

and:

We need revenue to balance the budget. We need sustainable clean-tech jobs. We need less dependence on Mideast oil. And we need to take steps to mitigate climate change — just in case Governor Perry is wrong. The easiest way to do all of this at once is with a gasoline tax or price on carbon. Would you rather cut Social Security and Medicare or pay a little more per gallon of gas and make the country stronger, safer and healthier? It still amazes me that our politicians have the courage to send our citizens to war but not to ask the public that question.

Similarly, but more succinctly, is this passage from Friedman’s Nov. 28, 2010 column, Got to Get This Right:

We need to raise gasoline and carbon taxes to discourage their use and drive the creation of a new clean energy industry, while we cut payroll and corporate taxes to encourage employment and domestic investment.

The same sentiments appeared most recently on Aug. 5, 2012, under virtually the same headline, Get It Right On Gas:

[W]e also need to get the economics right. We’ll need more tax revenue to reach a budget deal in January. Why not a carbon tax that raises enough money to help pay down the deficit and lower both personal income taxes and corporate taxes — and ensures that renewables remain competitive with natural gas?

Friedman was both more expansive and more eloquent in The Price Is Not Right (April 1, 2009):

[I]f I had my wish, the leaders of the world’s 20 top economies would commit themselves to a new standard of accounting — call it “Market to Mother Nature” accounting. Why? Because it’s now obvious that the reason we’re experiencing a simultaneous meltdown in the financial system and the climate system is because we have been mispricing risk in both arenas — producing a huge excess of both toxic assets and toxic air that now threatens the stability of the whole planet.

Just as A.I.G. sold insurance derivatives at prices that did not reflect the real costs and the real risks of massive defaults (for which we the taxpayers ended up paying the difference), oil companies, coal companies and electric utilities today are selling energy products at prices that do not reflect the real costs to the environment and real risks of disruptive climate change (so future taxpayers will end up paying the difference).

Whenever products are mispriced and do not reflect the real costs and risks associated with their usage, people go to excess. And that is exactly what happened in the financial marketplace and in the energy/environmental marketplace during the credit bubble.

And our biggest energy companies, utilities and auto companies became dependent on cheap hydrocarbons that spin off climate-changing greenhouse gases, and we clearly have not forced them, through a carbon tax, to price in the true risks and costs to society from these climate-changing fuels.

“Destructive creation” has wounded both the Market and Mother Nature. Smart regulation and carbon taxation can heal both.

One week later, in Show Us the Ball (April 8, 2009), Friedman singled out Rep. John Larson’s carbon tax bill, “America’s Energy Security Trust Fund and Security Act, for praise:

Since the opponents of cap-and-trade are going to pillory it as a tax anyway, why not go for the real thing — a simple, transparent, economy-wide carbon tax?

Representative John B. Larson, chairman of the House Democratic Caucus, has circulated a draft bill that would impose “a per-unit tax on the carbon-dioxide content of fossil fuels, beginning at a rate of $15 per metric ton of CO2 and increasing by $10 each year.” The bill sets a goal, rather than a cap, on emissions at 80 percent below 2005 levels by 2050, and if the goal for the first five years is not met, the tax automatically increases by an additional $5 per metric ton. The bill implements a fee on carbon-intensive imports, as well, to press China to follow suit. Larson would use most of the income to reduce people’s payroll taxes: We tax your carbon sins and un-tax your payroll wins.

People get that — and simplicity matters. Americans will be willing to pay a tax for their children to be less threatened, breathe cleaner air and live in a more sustainable world with a stronger America. They are much less likely to support a firm in London trading offsets from an electric bill in Boston with a derivatives firm in New York in order to help fund an aluminum smelter in Beijing, which is what cap-and-trade is all about. People won’t support what they can’t explain.

We also count a dozen columns urging gasoline and/or carbon taxation in 2006 alone, including Who’s Afraid of a Gas Tax? (“Americans not only know that our oil addiction is really bad for us, but they would be willing to accept a gasoline tax if some leader would just frame the stakes for the country the right way,” March 1, 2006). Friedman subsequently broadened his call to “a gasoline or carbon tax”: And The Color of the Year Is … (“You have to make sure that green energy sources … can be delivered as cheaply as oil, gas and dirty coal. That will require a gasoline or carbon tax to keep the price of fossil fuels up so investors in green-tech will not get undercut while they drive innovation forward and prices down,” Dec. 22, 2006).

Friedman kept the pressure on in 2007, with The First Energy President (“It means asking Americans to do some hard things [including] accepting a gasoline or carbon tax,” Jan. 5), and (A Warning From the Garden, Jan. 19):

I don’t care whether it is a federal gasoline tax, carbon tax, B.T.U. tax or cap-and-trade system, power utilities, factories and car owners have to be required to pay the real and full cost to society of the carbon they put into the atmosphere. And higher costs for fossil fuels make more costly clean alternatives more competitive… And prices matter. They drive more and cleaner energy choices. So when the president unveils his energy proposals, if they don’t call for higher efficiency standards and higher prices for fossil fuels — take your socks off yourself. It’s going to get hot around here.

In a 9,000-word cover story in the Times Sunday Magazine in 2007, Friedman stated his preference for a carbon tax over a cap-and-trade system:

The market alone won’t work. Government’s job is to set high standards, let the market reach them and then raise the standards more. That’s how you get scale innovation at the China price. Government can do this by imposing steadily rising efficiency standards for buildings and appliances and by stipulating that utilities generate a certain amount of electricity from renewables — like wind or solar. Or it can impose steadily rising mileage standards for cars or a steadily tightening cap-and-trade system for the amount of CO2 any factory or power plant can emit. Or it can offer loan guarantees and fast-track licensing for anyone who wants to build a nuclear plant. Or — my preference and the simplest option — it can impose a carbon tax that will stimulate the market to move away from fuels that emit high levels of CO2 and invest in those that don’t. Ideally, it will do all of these things. But whichever options we choose, they will only work if they are transparent, simple and long-term — with zero fudging allowed and with regulatory oversight and stiff financial penalties for violators. The Power of Green, April 15, 2007

Friedman reiterated his desire for a carbon tax later in 2007, while criticizing the carbon offsets fad:

[W]hen you suggest a carbon tax or a higher gasoline tax — initiatives that would redirect resources and change habits at the scale actually needed to impact global warming — what is the first thing you hear in Congress? “Impossible — you can’t use the T-word.” A revolution without sacrifice where everyone is a winner? There’s no such thing. Live Bad, Go Green, July 8, 2007.

On May 21, 2008, Friedman opined:

It baffles me that President Bush would rather go to Saudi Arabia twice in four months and beg the Saudi king for an oil price break than ask the American people to drive 55 miles an hour, buy more fuel-efficient cars or accept a carbon tax or gasoline tax that might actually help free us from what he called our “addiction to oil.” Imbalances of Power.

Eight days later, on May 29, 2008, Friedman argued for a “price floor” to “guarantee people a high-price of gasoline – forever.” As Friedman stated:

The message going forward to every car buyer and carmaker would be this: The price of gasoline is never going back down. Therefore, if you buy a big gas guzzler today, you are locking yourself into perpetually high gasoline bills. You are buying a pig that will eat you out of house and home. At the same time, if you, a manufacturer, continue building fleets of nonhybrid gas guzzlers, you are condemning yourself, your employees and shareholders to oblivion. Truth or Consequences.

Friedman’s Dec. 7, 2008 column, The Real Generation X, contained possibly his most full-throated call yet for a carbon tax (emphases added):

It makes no sense to spend money on green infrastructure — or a bailout of Detroit aimed at stimulating production of more fuel-efficient cars — if it is not combined with a tax on carbon that would actually change consumer buying behavior.

Many people will tell Mr. Obama that taxing carbon or gasoline now is a “nonstarter.” Wrong. It is the only starter. It is the game-changer. If you want to know where postponing it has gotten us, visit Detroit. No carbon tax or increased gasoline tax meant that every time the price of gasoline went down to $1 or $2 a gallon, consumers went back to buying gas guzzlers. And Detroit just fed their addictions — so it never committed to a real energy-efficiency retooling of its fleet. R.I.P.

If Mr. Obama is going to oversee a successful infrastructure stimulus, then it has to include not only a tax on carbon — make it revenue-neutral and rebate it all by reducing payroll taxes — but also new standards that gradually require utilities and home builders in states that receive money to build dramatically more energy-efficient power plants, commercial buildings and homes. This, too, would create whole new industries.

Friedman followed that up on Dec. 28 with Win, Win, Win, Win, Win …:

I believe the second biggest decision Barack Obama has to make — the first is deciding the size of the stimulus — is whether to increase the federal gasoline tax or impose an economy-wide carbon tax. Best I can tell, the Obama team has no intention of doing either at this time… But I’ve wracked my brain trying to think of ways to retool America around clean-power technologies without a price signal — i.e., a tax — and there are no effective ones. (Toughening energy-effiency regulations alone won’t do it.) Without a higher gas tax or carbon tax, Obama will lack the leverage to drive critical pieces of his foreign and domestic agendas… The two most important rules about energy innovation are: 1) Price matters — when prices go up people change their habits. 2) You need a systemic approach.

Nicholas Kristof

His Hurricane Sandy cri de coeur, Will Climate Get Some Respect Now?, brilliantly connects the storm’s destructive ferocity to climate change, citing a warmer ocean, rising seas, more moist atmosphere, and the possibility that melting sea ice in the Arctic abetted the unusual atmospheric pattern that kept Sandy from moving back out to sea. His column concluded:

[W]e may need to invest in cleaner energy, impose a carbon tax or other curbs on greenhouse gases, and, above all, rethink how we can reduce the toll of a changing climate. (Oct. 31, 2012)

Here’s a Kristof sampler from prior years: Extended Forecast: Bloodshed (April 12, 2008):

[T]he United States’ reluctance to confront  climate change in a serious way — like a carbon tax to replace the payroll tax, coupled with global leadership on the issue –­ [is] as unjust as it is unfortunate.” In Search of Cheney’s ‘Virtue’ (“The best way to encourage [widespread implementation of energy efficiency] would be to impose a carbon tax, although a cap-and-trade system is a reasonable backup.” Aug. 20, 2007). Our Gas Guzzlers, Their Lives (“All this [climate-exacerbated drought and famine in Africa] makes it utterly reckless that we fail to institute a carbon tax or at least a cap-and-trade system for emissions.” June 28, 2007). Scandal Below the Surface (“We know what is needed: a carbon tax or cap-and-trade system, a post-Kyoto accord on emissions cutbacks, and major research on alternative energy sources,” Oct. 31, 2006). A Paradise Drowning (“We must encourage conservation and fuel efficiency, support alternative forms of energy like wind, solar and biofuels, and … adopt a carbon tax… Jan. 8, 2006).

Gail Collins

When op-ed columnist Collins turned her attention to climate change, in early 2013, she zipped off some impressive lines:

There was a time … when the Republican Party was a hotbed of environmental worrywarts. The last big clean air act of the Bush I administration passed the House 401 to 21. But no more, no more. You’re not going to get any sympathy for controlling climate change from a group that doesn’t believe the climate is actually changing … It’s sort of ironic. These are the same folks who constantly seed their antideficit speeches with references to our poor, betrayed descendants. (“This is a burden our children and grandchildren will have to bear.”) Don’t you think the children and grandchildren would appreciate being allowed to hang onto the Arctic ice cap?

Collins acknowledged the Obama administration’s tightening of auto and appliance efficiency standards and then got down to business:

But a carbon tax/fee is the key to controlling climate change. That or just letting the next generation worry about whether the Jersey Shore is going to wind up lapping Trenton. (Cooling on Warming, March 27, 2013)

NYT Economic Columnist David Leonhardt (“Economix”)

The simplest idea in economics, I think, is that people respond to the incentives they are given… So if we have decided that we need to use less oil for our own good — which seems to be the case — we need big incentives to change our behavior… A substantial gas tax would be the simplest, with other taxes being cut to keep down the overall burden. Buy A Hybrid, Save A Guzzler, Feb. 8, 2006.

[I]f you put the economic advisers, from both parties, in a room and told them to hammer out solutions to the country’s big economic problems, they would find a lot of common ground. They could agree that doctors and patients need better incentives to choose effective medical care. They would probably hit upon education policies along similar lines, requiring that schools be held more accountable for what their students are, and are not, learning. They might suggest a carbon tax — a favorite idea of [former Bush chief economist Greg] Mankiw — to deal with global warming. The Economists are Writing Our Future, April 18, 2007.

No wonder [with gas now at $4 a gallon] that Americans are changing their driving habits so quickly. With sales plummeting, General Motors said Tuesday that it would stop making pickup trucks and sport utility vehicles at four of its North American plants. The company is also considering selling its Hummer brand, an emblem of the megavehicle. Rick Wagoner, G.M.’s chairman, explained the moves by saying that he thought the shift toward more efficient cars was ‘by and large, permanent.’ The unyielding reality is that price matters, enormously. That’s all you need to know about the car market these days. Big Vehicles Stagger Under the Weight of $4 Gas, June 4, 2008.

Steven Rattner 

NYT Contributing Opinion Writer Rattner made a classic (and, in 2021, somewhat antequated) case for President Biden to “lean more heavily on the private sector to boost his infrastructure plan’s odds of success,” in Biden’s Big Government Should Be Handled With Care, April 9, 2021. It’s unclear if centrists like WV Sen. Joe Manchin or a handful of reputedly climate-concerned Republican Senators like Romney (UT), Murkowski (AS) or Collins (ME) are listening:

It’s criminal that the 18.4-cent federal gasoline tax hasn’t been raised since 1993, especially with oil prices so low. A tax of $43 per ton on carbon would be roughly equivalent to a 38-cents-per-gallon increase in the price of gasoline, leading motorists to cut back on their driving and opt for public transportation. And the proceeds could be rebated to Americans other than the wealthy via income tax credits.

The simplest, most effective and ultimately least expensive way to address the climate problem would be through a tax on greenhouse gas emissions — a carbon tax. Think about how many inefficient programs, how many thousands of pages of regulations and how much waste could be avoided.

Other Newspapers 

See the Writers & Pundits section of our Archived Supporters page for older pro-carbon tax commentary by Washington Post columnists E.J. Dionne, Anne Applebaum and others; Financial Times columnist Clive Crook, San Francisco Chronicle columnist Carolyn Lochhead; and others.

Magazines

See the Writers & Pundits section of our Archived Supporters page for older pro-carbon tax commentary in The New Republic, Atlantic Monthly, The Nation, and other periodicals.

Elizabeth Kolbert, The New Yorker magazine, author, “The Sixth Extinction”

In her article “Rough Forecasts,” (April 14, 2014) Elizabeth Kolbert used the global ban on CFCs to foreground her argument that it is time to stop “standing around and waiting” when dealing with climate change. Specifically, Kolbert argued for a carbon tax and explained:

Economists on both sides of the political spectrum agree that the most efficient way to reduce emissions is to impose a carbon tax. “If you want less of something, every economist will tell you to do the same thing: make it more expensive,” former Mayor Michael Bloomberg observed, in a speech announcing his support for such a tax.

Kolbert’s call for a carbon tax is particularly salient in the last paragraph of her article:

The fact that so much time has been wasted standing around means that the problem of climate change is now much more difficult to deal with than it was when it was first identified. But this only makes the imperative to act that much greater, because, as one set of grim predictions is being borne out, another, even worse set remains to be written.

In an earlier article, “Paying For It,” (December 10, 2012) published in the aftermath of Hurricane Sandy, Kolbert forcefully made the case for a carbon tax both as a way to create the incentives needed to reduce carbon pollution and as a substantial source of revenue, preferable to other kinds of taxes.  She explained how the “polluter pays” principle applies to carbon taxes:

One way to think about global warming is as a vast, planet-wide Pigovian problem. In this case, the man pulls up to a gas pump. He sticks his BP or Sunoco card into the slot, fills up, and drives off. He’s got a full tank; the gas station and the oil company share in the profits. Meanwhile, the carbon that spills out of his tailpipe lingers in the atmosphere, trapping heat and contributing to higher sea levels. As the oceans rise, coastal roads erode, beachfront homes wash away, and, finally, major cities flood. Once again, it’s the public at large that gets left with the bill. The logical, which is to say the fair, way to address this situation would be to make the driver absorb the cost for his slice of the damage. This could be achieved by a new Pigovian tax, on carbon.

“Pigovian” refers to the legendary British economist Alfred Pigou who early in the 20th Century pioneered the study of “externalities,” with environmental pollution as his prime case.

Noting that “as Washington edges toward the fiscal cliff, it has become obvious to just about everyone, except maybe House Republicans, that Washington needs more revenue,” Kolbert pointed out recent research showing the fiscal benefits of carbon taxes:

The Congressional Research Service reported that, over the next decade, a relatively modest carbon tax could cut the projected federal deficit in half. Such a tax would be imposed not just on gasoline but on all fossil fuels—from the coal used to generate electricity to the diesel used to run tractors—so it would affect the price of nearly everything, including food and manufactured goods. To counter its regressive effects, the tax could be used as a substitute for other, even more regressive taxes, or, alternatively, some of the proceeds could be returned to low-income families as rebates (although, of course, this would cut down on the amount that could go toward deficit reduction).

But she lamented:

One key player who has not embraced the idea is Barack Obama. The White House spokesman, Jay Carney, was asked about the tax last month, en route, as it happens, to visit storm-ravaged areas of New York with the President. “We would never propose a carbon tax, and have no intention of proposing one,” Carney told reporters. This was taken by some to mean that Obama was opposed to the tax and by others to mean just that he was not going to be the one to suggest it. In either case, the White House is making a big mistake. Pigovian taxes are rarely politically popular—something they have in common with virtually all taxes. But, as Obama embarks on his second term, it’s time for him to take some risks. Several countries, including Australia and Sweden, already have a carbon tax. Were the United States to impose one, it would have global significance. It would show that Americans are ready to acknowledge, finally, that we are part of the problem. There is a price to be paid for living as we do, and everyone is going to get stuck with the bill.

Kolbert’s suggestion partially came true at the end of 2015, at the Paris climate conference, when President Obama took the “risk” (albeit in the latter part of his second term) and affirmed that he has “long believed that the most elegant way to drive innovation and to reduce carbon emissions is to put a price on it … This is a classic market failure.” (Obama’s quote may be found at the end of the linked post.)

Others

See the Writers & Pundits section of our Archived Supporters page for older pro-carbon tax commentary by The New Yorker columnist Hendrik Hertzberg, columnist Fareed Zakaria, Newsweek columnist Robert J. Samuelson, 350.org founder and journalist-author Bill McKibben, journalist David Roberts, and others.

Editorial Positions

This page features editorial positions by newspapers, magazines, etc. (rather than merely opinions expressed by columnists or reporters). Half a dozen other pages with different “supporter” categories may be accessed via the “Progress” tab in our menu bar.

The New York Times

Editorials at the Times carry the imprimatur of the editorial board. In years past, the Times repeatedly urged only that nations “put a price” on carbon emissions — a vague formulation that has often connoted support for cap-and-trade. In 2015, the board finally began calling for an explicit carbon tax, and opened 2016 citing British Columbia’s successful carbon tax:

Proof That a Price on Carbon Works (January 19, 2016):

British Columbia started taxing emissions in 2008. One big appeal of its system is that it is essentially revenue-neutral. People pay more for energy (the price of gasoline is up by about 17 cents a gallon) but pay less in personal income and corporate taxes. And low-income and rural residents get special tax credits. The tax has raised about $4.3 billion while other taxes have been cut by about $5 billion. Researchers have found that the tax helped cut emissions but has had no negative impact on the province’s growth rate, which has been about the same or slightly faster than the country as a whole in recent years.

The Paris Climate Pact Will Need Strong Follow-Up  (December 14, 2015):

Much was said about how the agreement sent a strong “signal” to investors, and indeed, Paris was swarming with corporate chieftains and Silicon Valley heavyweights. But the strength of that signal will depend heavily on whether governments are willing to promote such investments while removing the tax subsidies that favor dirtier fossil fuels — perhaps to the point of embracing carbon taxes.

The Case for a Carbon Tax (June 6, 2015):

A carbon tax would raise the price of fossil fuels, with more taxes collected on fuels that generate more emissions, like coal. This tax would reduce demand for high-carbon emission fuels and increase demand for lower-emisson fuels like natural gas. Renewable sources like solar, wind, nuclear and hydroelectric would face lower taxes or no taxes. To be effective, the tax should also be applied to imported goods from countries that do not assess a similar levy on the use of fossil fuels.

Revenue generated by carbon taxes could be used for a variety of purposes. A lot of the money should surely be given to households, especially the poorest, through tax credits or direct payments to offset the higher prices they would have to pay for gasoline, electricity and other goods and services because of the tax. Some of the money could be used to invest in renewable energy and public transportation, or to lower other taxes.

Global Warming and Your Wallet (July 6, 2007): “When the market, on its own, fails to arrive at the proper price for goods and services, it’s the job of government to correct the failure… We are now using the atmosphere as a free dumping ground for carbon emissions. Unless we — industry and consumers — are made to pay a significant price for doing so, we will never get anywhere.”

Warming Up on Capitol Hill (March 25, 2007): “Forcing polluters to, in effect, pay a fee for every ton of carbon dioxide they emit will create powerful incentives for developing and deploying cleaner technologies.”

The Truth About Coal (Feb. 25, 2007): “There is a need to put a price on carbon to force companies to abandon older, dirtier technologies for newer, cleaner ones. Right now, everyone is using the atmosphere like a municipal dump, depositing carbon dioxide free. Start charging for the privilege and people will find smarter ways to do business. A carbon tax is one approach. Another is to impose a steadily decreasing cap on emissions and let individual companies figure out ways to stay below the cap.”

Avoiding Calamity on the Cheap (Nov. 3, 2006): “Since the dawn of the industrial revolution, the atmosphere has served as a free dumping ground for carbon gases. If people and industries are made to pay heavily for the privilege, they will inevitably be driven to develop cleaner fuels, cars and factories.”

The Washington Post

Carbon tax is best option Congress has (May 7, 2013):

Sen. Max Baucus (D-Mont.), chairman of the Finance Committee, announced last month that he wants to spend the rest of his final term in office reforming the tax code , and there are signs that Republicans want an overhaul this year, too…

No honest tax reform paper, for example, would be complete without discussion of a carbon tax, an elegant policy Congress could immediately take off the shelf. It would make polluters pay for their own pollution, which is the best way to encourage greener thinking. It would cut emissions without overspending national wealth on grandiose central planning or command-and-control regulation. And it would raise revenue, which lawmakers could use for debt reduction, lowering other taxes, improving the social safety net or some combination. The carbon tax is one of the best ideas in Washington almost no one in Congress will talk about.

Those still worried about the economic effects need only consider how it could fit into a bigger tax-reform package such as the one Mr. Baucus wants to produce. Surely, Republicans should want to replace economy-sapping taxes on labor or business in return for a much more efficient tax on pollution. Democrats should be pushing for some of the revenue to pump up programs such as the Earned Income Tax Credit to ensure the carbon tax doesn’t sting consumers, particularly those least able to afford it.

Lawmakers should read the Finance Committee staff’s work and then consult a recent analysis by the Brookings Institution’s Adele Morris , who found that even a relatively modest carbon tax could produce nearly a trillion dollars in debt reduction over two decades, significantly drop other tax rates and enhance anti-poverty programs.

The carbon tax (November 10, 2012):

EARLY WEDNESDAY, delivering his victory speech in Chicago, President Obama elevated an issue that had hardly come up during the campaign. “We want our children to live in an America,” he said, “that isn’t threatened by the destructive power of a warming planet.”

Later that day, Senate Majority Leader Harry M. Reid (D-Nev.) told reporters that climate change is an important issue and that he wants to “address it reasonably” — particularly following big storms in the Northeast that have highlighted rising sea levels and other dangers associated with global warming.

House Speaker John R. Boehner (R-Ohio), meanwhile, spoke about cooperating with Democrats on urgently needed budget reform

Now if there were just some policy that would reduce carbon emissions and raise federal ­revenue . . .

A tax on carbon, of course, is that policy, and lawmakers and the president should be discussing it. The idea is to put a simple price on emissions of carbon dioxide and other greenhouse gases — some dollar amount per ton of CO² — that steadily increases at a pre-set rate.

This is the best plan lawmakers can take off the shelf to fight global warming. As an added benefit, it would reduce dependence on imported oil. If businesses and consumers had to pay something for the otherwise invisible costs of their actions — in this case, pollution — they would be more careful. Their combined preferences, not those of Congress or bureaucrats, would determine how to wring carbon out of the economy.
Homeowners might turn down their thermostats or weatherize their windows. Power companies would devise the cheapest ways to reduce the carbon dioxide they emit, without the government ordering them to build this or to refrain from that. At first, they would probably burn more natural gas and less coal, a cheap way to cut lots of emissions quickly. In the long term, the demand for green technologies would expand, and with it private investment.

Sorry Record – Waiting for breakthrough technologies is not the way to reduce greenhouse gases (July 11, 2006)

[The Administration] has resisted taxing carbon use, preferring instead to provide incentives for oil and gas extraction — just the opposite of what’s needed.

Some Positive Energy — Now Start Talking About a Carbon Tax, (June 25, 2007).

As important as many of the measures in [the Senate energy] bill are, they amount to only tinkering at the margins of a serious problem. What the Senate bill doesn’t do — and what the House bill won’t do when it is brought to the floor for consideration next month — is spark a necessary debate on the imposition of a cap-and-trade system or a carbon tax. This must be on the agenda after the Fourth of July recess when the Senate is expected to take up global warming. Sooner or later, Congress will have to realize that slapping a price on carbon emissions and then getting out of the way to let the market decide how best to deal with it is the wisest course of action.

Los Angeles Times

How California can best fight climate change (July 14, 2014):

A carbon tax that pushes up gas prices would give all California drivers reason to be gas-thrifty. They could then decide whether to use their tax credit to offset the increased cost of buying gas or find ways to reduce gas purchases and use the credit for other purchases. Substantially larger tax credits would go to lower-income residents and perhaps to rural residents for whom public transit isn’t available. Some of the money could be set aside for rebates to residents who buy fuel-efficient cars, or to agricultural operations that switch to cleaner farm vehicles or methane-capture technologies.

The L.A. Times ran two stirring editorials in May-June 2007 that powerfully made the case for taxing carbon. Here are excerpts:

Time to Tax Carbon, (May 28, 2007):

There is a growing consensus among economists around the world that a carbon tax is the best way to combat global warming, and there are prominent backers across the political spectrum … Yet the political consensus is going in a very different direction. European leaders are pushing hard for the United States and other countries to join their failed carbon-trading scheme, and there are no fewer than five bills before Congress that would impose a federal cap-and-trade system. On the other side, there is just one lonely bill in the House, from Rep. Pete Stark (D-Fremont), to impose a carbon tax, and it’s not expected to go far.

The obvious reason is that, for voters, taxes are radioactive, while carbon trading sounds like something that just affects utilities and big corporations. The many green politicians stumping for cap-and-trade seldom point out that such a system would result in higher and less predictable power bills. Ironically, even though a carbon tax could cost voters less, cap-and-trade is being sold as the more consumer-friendly approach.

A well-designed, well-monitored carbon-trading scheme could deeply reduce greenhouse gases with less economic damage than pure regulation. But it’s not the best way, and it is so complex that it would probably take many years to iron out all the wrinkles. Voters might well embrace carbon taxes if political leaders were more honest about the comparative costs.

Reinveting Kyoto, (June 11, 2007):

A better treaty [than Kyoto] would scrap the unworkable carbon-trading scheme and instead impose new taxes on carbon-based fuels. As recently explained in the first installment of this series [Time to Tax Carbon, above], carbon taxes avoid many of the pitfalls of carbon trading. They would produce an equal incentive for every nation to clean up without relying on arbitrary dates or caps, or transferring money from one nation to another. They’re also much less subject to corruption because they give governments an incentive to monitor and crack down on polluters (the tax money goes to the government, so the government wins by keeping polluters honest)… Real solutions to global warming, such as carbon taxes, won’t come cheap — they’ll make power bills steeper and gas prices even higher than they are now. But the economic news isn’t all bad. Much of the clean technology of the future will probably be developed in the United States and sold overseas. Think of [a carbon tax] as a novel way of reducing our trade deficit with China while building a cleaner world.“

For the strong critique of cap-and-trade in the Time to Tax Carbon editorial, click here.

Other Newspapers

Albany Times-Union:

THE ISSUE: Evidence of a warming planet is clear and obvious.

THE STAKES: A carbon tax is needed to stave off a looming global crisis.

[Fossil fuel subsidies] are an absurd use of public finances, and must be eliminated as quickly as possible. That long-overdue move must be coupled with a stiff carbon tax that makes fossil fuels artificially and increasingly expensive. Such a tax would immediately make greener energy more competitive, and encourage private enterprise to develop new and better technologies. And it would acknowledge that fossils fuels have a negative societal cost that is increasingly intolerable.

Here’s another idea with merit: an import tax that charges manufacturers for the carbon impact of their products. Such tariffs, which are now being weighed by the European Union and Democrats in Congress, would leverage American buying power to force global changes and reduce concern that fighting climate change domestically puts the country’s economy at a global disadvantage.

Certainly, carbon taxes and tariffs would hit lower-income Americans too hard. That’s why both must be structured with rebates that alleviate the pain.

But as 100-year storms become 10- or 5-year storms, the cost of our stubborn inaction grows increasingly clear. The time for change is now, if not sooner.

Editorial: How soon is now?, Sept 8, 2021.

Detroit Free Press:

A tax on carbon dioxide emissions, phased in gradually but relentlessly, would be the most transparent and efficient step this country could take in the search for energy independence and reductions in many emissions, including carbon dioxide. It would send a hugely important signal to the markets — for cars and for alternative energy sources such as windmills and solar collectors, in particular — that innovation and conservation are essential. Consumers are going to pay for any measures taken to reduce greenhouse gases and shift away from dependence on foreign petroleum. But most politicians choose instead to hide the costs by placing expensive demands on automakers and by dispensing subsidies for alternative fuels, such as ethanol, that become a hidden tax burden. A cap-and-trade system for emissions also would have disguised costs. Keep Carbon Tax in the Mix of Solutions, July 12, 2007.

Chicago Tribune:

[T]he ultimate goal should not be to reduce the price consumers pay at the pump. It should be to reduce the amount going to oil producers. Global warming is more than ample grounds for levying taxes on carbon-based fuels, including gasoline, to reduce emissions. But those taxes would fall partly on foreign oil producers. By cutting consumption, they promise to put downward pressure on world crude oil prices—weakening OPEC and stemming the flow of dollars to anti-American regimes. American consumers have a choice: They can pay high prices to oil producers or to themselves. The tax proceeds can be used to finance programs of value here at home or to pay for cuts in other taxes—even as they curb the release of carbon dioxide. Pump Pain, May 20, 2008.

Christian Science Monitor:

Consumption taxes, after all, are often designed to wean people off bad behavior, such as smoking. A 90 percent drop in these emissions is probably what’s needed to limit any rise in atmospheric warming to 2 degrees Celsius, a goal that many scientists recommend. Most presidential candidates do endorse pinching pocketbooks, but only indirectly, such as by calling for higher fuel efficiency in vehicles and a cap on greenhouse-gas pollution from company smokestacks. Such demands on industry have the advantage of creating more certainty in reducing emissions, but they are complex to enforce. Gore would do both: tax carbon use and cap emissions. Putting a crimp on global warming can’t be done solely by promoting new energy technologies and voluntary conservation. Consumers of oil and coal need a direct tax shock. Christian Science Monitor, July 5, 2007.

The Monitor was even more direct in a pair of editorials on Oct. 25 and 26. In the first, Be Wary of Complex Carbon Caps, the Monitor noted the loopholes, fraud and other problems that have hamstrung carbon cap-and-trade programs. In the second, A Tax on Carbon to Cool the Planet, the Monitor summarized the first editorial:

Indeed, caps may put the US on a knowable track to, say, an 80 percent reduction in carbon emissions by 2050. But as the previous Monitor’s View pointed out, the flaws in cap-and-trade plans as experienced in other nations – their complexity and vulnerability to fraud and special-interest lobbyists – would reduce the intended effect. They also take a long time to set up and get working right. And, in the end, they also raise energy prices for consumers, just not as directly as a tax.

The Monitor then concluded:

With Europe’s cap-and-trade system faltering, the US should be a leader in using a carbon tax, even if big polluters such as China don’t follow. As a last resort, the US could tax goods from countries that fail to cut their carbon emissions.

A carbon tax is not the whole solution. Regulations will still be needed, such as stiffer fuel-economy standards for cars and trucks. And the US should fund research into alternative fuels, too. All it takes is the political will to act.

Eugene (OR) Register-Guard:

The crisis presented by global warming demands a response that is simple, comprehensive and effective. A tax on carbon consumption is the only response in sight that both discourages the production of emissions that cause global warming, and finances the rapid transition to a post-carbon economy… “The best way to tax carbon fuels is at the point of production: at the wellhead, mine or biofuel plant. The added tax should be large – starting at the equivalent of $1 per gallon of gasoline, and increasing to the equivalent of $6 per gallon of gasoline over 10 years… The phase-in of high taxes on carbon fuels over 10 years will provide huge incentives for market-financed, market-driven, market-governed development of unsubsidized, safe, sustainable alternate energy sources, far more efficient uses of energy, and other alternate products and methods. (The Cold Truth, July 22, 2007).

Thought Leaders

This page quotes religious, environmental and business “thought leaders” supporting carbon taxes (or more targeted taxes, e.g., on gasoline). To access the other half dozen pages with different supporter categories, click “Progress” on the navigation bar and move to the desired category.

Prominent Former Public Officials

Barack Obama, 44th U.S. President

While Obama has not formally proposed taxing carbon emissions, at his Dec. 1, 2015 press conference at the Paris climate summit he argued for pricing carbon emissions in the strongest and clearest terms used by any president to date.

I have long believed that the most elegant way to drive innovation and to reduce carbon emissions is to put a price on it. This is a classic market failure. If you open up an Econ101 textbook, it will say the market is very good about determining prices and allocating capital towards its most productive use — except there are certain externalities, there are certain things that the market just doesn’t count, it doesn’t price, at least not on its own. (White House Press Office)

Former Vice-President Al Gore

The individual who has done the most to raise the world’s consciousness of global warming has long been an outspoken advocate for taxing carbon emissions. “The most direct policy solution to the climate crisis is a carbon tax, offset by reductions in taxes on wages,” Gore said in November 2012. “By including the carbon tax in the solution to the fiscal cliff we can [get] away from the climate cliff.” (The Hill.)

In an interview in the Sept/Oct 2007 issue of 02138 magazine, Gore explained, “I’m convinced that we should eliminate the payroll tax and replace it dollar for dollar with a CO2 tax.”

Gore voiced this theme in an historical context in a March, 2008 talk at Autodesk: “Here’s the solution. We need a CO2 tax, revenue-neutral, to replace taxation on employment, which was invented by Bismarck — and some things have changed since the 19th Century.” (This is at around the 13:30-minute mark of his talk).

Gore added a bit of poetry to this idea in his address, A Generational Challenge to Repower America, on July 17, 2008 at D.A.R. Constitution Hall in Washington D.C., telling Americans, “We should tax what we burn, not what we earn. This is the single most important policy change we can make.”

In early 2010, in a 1,900-word opinion piece in the Sunday New York Times, We Can’t Wish Away Climate Change, Gore sought to re-invigorate the climate movement in the wake of the Dec. 2009 COP-15 debacle at Copenhagen. The former vice-president’s essay stands as a brilliant rebuttal to climate denialists:

[T]he reality of the danger we are courting has not been changed by the discovery of at least two mistakes in the thousands of pages of careful scientific work over the last 22 years by the Intergovernmental Panel on Climate Change. In fact, the crisis is still growing because we are continuing to dump 90 million tons of global-warming pollution every 24 hours into the atmosphere — as if it were an open sewer.

It is true that the climate panel published a flawed overestimate of the melting rate of debris-covered glaciers in the Himalayas, and used information about the Netherlands provided to it by the government, which was later found to be partly inaccurate. In addition, e-mail messages stolen from the University of East Anglia in Britain showed that scientists besieged by an onslaught of hostile, make-work demands from climate skeptics may not have adequately followed the requirements of the British freedom of information law.

But the scientific enterprise will never be completely free of mistakes. What is important is that the overwhelming consensus on global warming remains unchanged. It is also worth noting that the panel’s scientists — acting in good faith on the best information then available to them — probably underestimated the range of sea-level rise in this century, the speed with which the Arctic ice cap is disappearing and the speed with which some of the large glacial flows in Antarctica and Greenland are melting and racing to the sea.

Michael R. Bloomberg, New York City Mayor, 2002-2013

In a rousing speech in Seattle in November 2007, which he recapitulated a month later at the UN Framework Conference on Climate Change in Bali, New York City Mayor Michael R. Bloomberg vaulted to the head of the class of public officials supporting carbon taxes. As noted on our blog, the mayor’s speech put Bloomberg alongside former Vice-President Al Gore as the nation’s leading advocate of a carbon tax to cap and reduce carbon emissions from fossil fuels. Bloomberg could not have been more forceful on the need to price carbon emissions, the superiority of carbon taxes over cap-and-trade schemes, and the need for political leadership at this crucial time.

Bloomberg renewed his call for a U.S. carbon tax in November 2010. Speaking at the Wall Street Journal CEO Council, the NYC Mayor said the U.S. needs to reduce its dependence on foreign oil if “you want to stop sending your money to…terrorists.” The answer: “We need a carbon tax.”

Statesmen & women

António Guterres, Secretary-General of the United Nations: “The time of fossil fuel subsidies is over. Coal must be phased out. Carbon should be given a price. 2021 must be the year of a great leap towards carbon neutrality.” — on Twitter, Nov. 16, 2020.

Religious Leaders

Pope Francis: In his June 18, 2015 encyclical, On Care For Our Common Home, Pope Francis broke new ground by citing and supporting the overwhelming scientific consensus that humans’ use of fossil fuels is causing dangerous global warming. And in a second bold stroke, Francis aligned the Catholic Church with the equally robust economic consensus demanding that societies internalize the costs of pollution, especially climate pollution. He wrote:

[O]nly when the economic and social costs of using up shared environmental resources are recognized with transparency and fully borne by those who incur them, not by other peoples or future generations, can those actions be considered ethical. [Paragraph 195]

Francis stresses that emissions trading isn’t the way, for three reasons:

  • First, trading carbon allowances allows traders to profit from the climate crisis — indeed, it’s designed to do that.
  • Second, “offsets” that are virtually hard-wired into cap-and-trade shift the burden of pollution to developing countries.
  • Third, cap-and-trade with offsets absolves the wealthy of responsibility to rein in their carbon-intensive lifestyles.

In his own words:

The strategy of buying and selling carbon credits can lead to a new form of speculation which would not help reduce the emission of polluting gases worldwide. This system seems to provide a quick and easy solution under the guise of a certain commitment to the environment, but in no way does it allow for the radical change which present circumstances require. Rather, it may simply become a ploy which permits maintaining the excessive consumption of some countries and sectors. [Paragraph 171]

Francis-carbon4-taxThe Pope’s call for “transparent” internalization of the costs of pollution aligns with mainstream economics’ tenet that a simple, direct carbon tax is the most transparent and effective corrective to shift “the economic and social costs” of climate pollution onto “those who [impose] them” and to broadly incentivize the transition to clean energy and efficiency. For more details, see our post: Who’s “Out of Step” on Climate — Pope Francis or Harvard Expert? (6/19/15). For an insightful discussion of the Encyclical’s treatment of carbon credits, see this post in Theology Politics Today by Daniel R. DiLeo, a Ph.D. student in theological ethics at Boston College.

Two months after the Pope’s encyclical, Islamic Leaders and Scholars from 20 countries issued an “Islamic Declaration on Climate Change” on August 18. 2015, calling on the world’s 1.6 billion Muslims and Muslim-majority oil-producing countries to act as leaders in eliminating greenhouse gas emissions, as The New Republic reported in The Islamic Climate Change Declaration Could Be More Effective Than Pope Francis’s Encyclical.

The Declaration begins by summarizing the scientific consensus:

The pace of Global climate change today is of a different order of magnitude from the gradual changes that previously occurred throughout the most recent era, the Cenozoic. Moreover, it is human-induced: we have now become a force dominating nature… Our species, though selected to be a caretaker or steward (khalifah) on the earth, has been the cause of such corruption and devastation on it that we are in danger ending life as we know it on our planet. This current rate of climate change cannot be sustained, and the earth’s fine equilibrium (mīzān) may soon be lost. As we humans are woven into the fabric of the natural world, its gifts are for us to savour. But the same fossil fuels that helped us achieve most of the prosperity we see today are the main cause of climate change.

The Declaration then raises the moral implications:

Excessive pollution from fossil fuels threatens to destroy the gifts bestowed on us by God, whom we know as Allah – gifts such as a functioning climate, healthy air to breathe, regular seasons, and living oceans. But our attitude to these gifts has been short-sighted, and we have abused them. What will future generations say of us, who leave them a degraded planet as our legacy? How will we face our Lord and Creator?

And quotes the Millennium Ecosystem Assessment (UNEP, 2005), backed by over 1300 scientists from 95 countries, to warn:

Human activity is putting such a strain on the natural functions of the earth that the ability of the planet’s ecosystems to sustain future generations can no longer be taken for granted.

Finally, the Declaration points out the frustrating lack of progress in the UN climate negotiations:

It is alarming that in spite of all the warnings and predictions, the successor to the Kyoto Protocol which should have been in place by 2012, has been delayed. It is essential that all countries, especially the more developed nations, increase their efforts and adopt the pro-active approach needed to halt and hopefully eventually reverse the damage being wrought.

Although the Muslim Declaration is not a policy document and does not mention or endorse carbon emissions pricing per se, its characterization of climate pollution as “corruption” is consistent with the “polluter pays” ethos of carbon fees that compels individuals and institutions to assume responsibility for harms stemming from their actions and policies.

Rabbi Arthur Waskow, The Shalom Center, Philadelphia: Rabbi Waskow, a long-time leader in progressive Judaism and ecumenical organizing against injustice, has been speaking and organizing about U.S. “oiloholism” for some time. He has skillfully abridged material from CTC’s Web site on the Shalom Center’s site under the title Carbon Tax: Crucial Step To Stop Global Scorching.

Friends Committee on National Legislation (Quakers):

“What do the CEO of the world’s largest oil company, a former Reagan administration economist, the chair of the House Democratic Caucus, and the ranking Republican member of the House Science and Technology Subcommittee on Energy and Environment all agree on? That taxing the carbon content of fossil fuels would be the most direct, transparent, and effective way to reduce the human causes of global warming.”

“The key to winning public support for a carbon tax is that the money goes back to taxpayers. By itself, the carbon tax is regressive. People who pay a larger percentage of their income on energy and fuel, primarily people with low incomes, would be hurt the most. If the tax were accompanied by a dividend or tax credit system, however, it could easily be structured to have a net progressive effect — returning more money to most taxpayers than it costs them in higher bills for energy and products whose price is linked to energy.”

(FCNL Washington Newsletter, February 2009)

Devin Helfrich, FCNL’s former climate policy advocate, and CTC’s James Handley compared the Waxman-Markey cap-and-trade proposal with the simpler and more straightforward carbon tax proposals here.

Visionary Thinkers

(admittedly a squishy category, but perhaps helpful just the same)

Environmentalist-Entrepreneur Paul Hawken

“There’s no policy, there’s nothing that would accelerate these [climate solutions detailed in Hawken’s “Drawdown” book] more quickly than carbon pricing. Nothing would do more. There’s not a single solution in Drawdown that wouldn’t accelerate … if we had carbon pricing.” — Hawken, speaking in a telephone call with Citizen Climate Lobby leaders and members on August 14, 2017. (Link is to a YouTube video that opens to the section in which Hawken is asked about carbon pricing.)

Inventor-Entrepreneur Elon Musk

Musk, founder and CEO of both Tesla Motors (high-end electric cars) and SolarCity (supplier of photovoltaic panels and systems, now mass-manufacturing power-storage batteries), is rare among big-time entrepreneurs and “disrupters” in his repeated strong support of carbon taxing. In August 2016 we reported one such instance, Musk’s detailed and powerful narrative in response to a reporter at SolarCity’s battery “Gigafactory” under construction near Reno, NV. Here are excerpts:

There are many more Musk quotes in our August2016 blog post. See link at right.

Our August 2016 blog post has more, including Musk’s evocation of carbon taxing’s consistency with libertarian philosophy. See link at right.

“The real right way to correct [the subsidy] would be to establish a carbon tax. If you ask any economist they will tell you that is the obvious thing to do, put the correct price on carbon because we currently have an error in the economy which misprices carbon at zero or something closer to zero. It is a fundamental economic error.”

“[A]ll we are doing [with a carbon tax] is trying to match the inherent subsidy for fossil fuels . . . on the sustainable energy side. Fossil fuels are already getting a massive subsidy if you believe in global warming. If you don’t then [the subsidy] seems really unfair. If you do then it is like oh we are just trying to correct it.”

“[If you have . . . an unpriced externality … then any government action to increase the price above zero reduces the error in the economy. [What libertarians] should actually be opposed to is anything that increases the error in the economy, a pricing information error. So pricing carbon, if you believe in global warming, does not increase the price of the error it decreases the price of the error.”

Futurist and author Ramez Naam

Naam is a former Microsoft “Partner and Director of Program Management” who led teams developing early versions of Microsoft Outlook, Internet Explorer, and the Bing search engine, according to his Web site. In late 2015 and early 2016 he published a linked series of thought-provoking essays in which he drew upon declining-cost curves in wind power, solar photovoltaic cells, and battery storage to estimate possible prodigious growth paths for renewables in the U.S. (Vox’s David Roberts has a nice distillation of Naam’s posts here.)

Unlike many other solar-renewable proponents, however, Naam isn’t shy in calling for carbon taxes, as Guardian reporter Mark Gunther reported in a recent profile

Policy is the toughest nut to crack, Naam says. Solar would not be thriving without government subsidies in the US and, even more so, in Germany. To drive clean-energy innovation faster and further, Naam, like a growing number of business leaders and economists across the political spectrum, advocates a carbon tax.

He’s got a simple, four-point plan for a carbon tax. First, pass the tax, give businesses and consumers five years to prepare for it, and start it at just $10 per ton of CO2. Second, raise the price by $10 a year until the US meets its emission targets. Third, put a tax on imports from countries that don’t tax carbon. Fourth, give all the money back to taxpayers, probably by reducing payroll of income taxes.

Environmental Organizations and Leaders

Lester Brown, Earth Policy Institute: “We need a way to reduce gasoline use, one that is practical and politically acceptable. We need a higher gas tax, but the only way to get a gas tax rise large enough to wean us from imported oil is to offset the rise with a reduction in the tax on income. The gas tax boost should be substantial — a rise that will send a strong, clear signal to consumers — and it should be gradually phased in. A gasoline tax hike of 30¢ a gallon per year for the next 10 years would send the right signal. This eventual increase of $3 per gallon would be offset at every step of the way with a reduction in income taxes.” (Let’s Raise Gas Taxes And Lower Income Taxes, May 11, 2006)

Carl Pope, Sierra Club executive director: “It [a carbon tax] will be more effective [than a cap-and-trade system] if people know that in year ‘X’ they will pay this much. Companies are highly motivated by costs.” (quoted in Tax on Carbon Emissions Gains Support; Industry and Experts Promote It as Alternative to Help Curb Greenhouse Gases, Washington Post, April 1, 2007) The article goes on to say: “Moreover, he [Pope] worries that rationing carbon allowances based on historical emissions would reward companies that spew out the most greenhouse gases now and did the least to limit them in the past.”

Ralph Nader: In a  Dec. 3, 2008 Wall Street Journal op-ed co-authored with Canadian Toby Heaps, We Need a Global Carbon Tax (subtitled, “The cap-and-trade approach won’t stop global warming”), the noted environmental and citizen activist made a compelling case for pricing carbon emissions via a tax rather than a trading scheme:

A global carbon tax levied on a relatively small number of large sources can be monitored by satellite and checked against the annual surveillance of fiscal and economic polices already carried out by IMF staff. Thus, the accounting involved is much more precise and much less subject to the vagaries of corruption and conflict over which industries and companies get their free handouts of carbon credits — carbon pork — than in a cap-and-trade system.

Greenpeace: Supports an emissions cap of 80 percent (with auctioned credits) AND a carbon tax. (Greenpeace Staff Blog)

Business Leaders

Bob Dudley, British Petroleum CEO, “A global carbon price would help to unleash market forces and provide the right incentives for everyone to play their part.” (Christian Science Monitor, Feb. 17, 2015).

ExxonMobil CEO Rex Tillerson and other company officials have frequently voiced support for a federal carbon tax. Here’s how the Wall Street Journal summarized the oil giant’s stance in mid-2016:

Exxon Mobil is ramping up its lobbying of other energy companies to support a carbon tax, marking a shift in the oil giant’s approach to climate change as the industry faces growing pressure to address the politically charged issue.

Exxon’s official position has long been the same—a carbon tax is the best way to address the risks of warming temperatures—but it has done little to actively advocate for that goal in recent years. Lately, Exxon has been making the case with its U.S. counterparts to support a carbon tax, arguing that the industry must not oppose all climate policies, according to people familiar with Exxon’s thinking.

Top Exxon officials have been more vocal about their support for a carbon tax and have met with Capitol Hill offices about related legislation, according to the company’s recent lobby disclosure forms.

For the past six months, Exxon has been asserting its position more in meetings within trade associations, including the American Petroleum Institute and American Fuel and Petrochemical Manufacturers, according to multiple reports from people who have attended meetings with Exxon officials.

“Of the policy options being considered by governments, we believe a revenue-neutral carbon tax is the best,” Suzanne McCarron, the company’s vice president of public and government affairs, wrote in May in the Dallas Morning News.

A straightforward carbon tax that is revenue-neutral—meaning other taxes should be lowered to offset the impact—is far preferable to the patchwork of current and potential regulations on the state, federal and international levels, according to Exxon spokesman Alan Jeffers.

(WSJ, Exxon Touts Carbon Tax to Oil Industry, June 30, 2016. Sorry no links in article.)

The article looks like a solid take. Exxon “favors a carbon tax” but there is no record of its having urged elected officials to back carbon tax legislation. In fact, Exxon has famously invested millions of dollars in organizations that aggressively espouse climate-denial arguments, as the Union of Concerned Scientists has systematically documented. Exxon’s support for carbon taxing should be viewed critically and, um, skeptically.

Note: Remaining quotes on this page are circa 2008, i.e., not current.

Jamie Dimon, Chairman and CEO JPMorgan Chase & Co.: “[I]t would be a shame to let gas go below $3.50 or $3.25 a gallon – we should add the taxes to BTU, charge energy. We’ll all learn to be a lot more efficient … people aren’t gonna put $100 billion into alternative energy if oil can go back to $50. And it’s a commodity, there will be a surplus one day and it will go down… I think we’re going to have to give it back to lower paid people. You know, so they’re losing $2000 a year now on oil and on food, so it has to come out of payroll taxes or low income, and we shouldn’t be selfish about it.” Interview July 2008

Donald E. Felsinger, Chairman and CEO, Sempra Energy, the subject of a recent “Saturday Interview” in the New York Times, was asked if he believes “that some form of carbon emissions restrictions, perhaps in the form of a carbon tax, is inevitable?” He responded:

I believe they are inevitable. We are having debates within my own company about what is a better outcome, whether it be cap-and-trade or a tax. I think the most effective way to deal with carbon pollution is to have a carbon tax. Turning Energy Uncertainty Into Opportunity, May 3, 2008.

Jim Gordon, CEO, Energy Management, Inc. (developer of the Cape Wind windmill project in Nantucket Sound): “The scale, urgency and challenge of climate change and energy security require that all citizens and corporations either pay the health, military and environmental degradation costs of carbon emissions or begin to transition to a more sustainable future. Implementing a revenue neutral carbon tax is the most effective way of internalizing the real costs of burning fossil fuels and providing the pricing signal that will modify consumer behavior. A carbon tax rather than a cap and trade program will provide the best chance of ensuring a more rapid path to this sustainable future.” (Personal communication to CTC, March 29, 2008)

Bruce Williamson, CEO, Dynegy, quoted in a recent Houston Chronicle story, expressed strong support for a carbon tax, while recognizing that it would make some of his fellow energy company CEO’s uncomfortable:

Fellow power company CEOs “would probably cringe to hear me say it,” Williamson said, but he believes a federal tax on carbon dioxide emissions would be more fair than a cap-and-trade system.

Mr. Williamson description of the benefits of a carbon tax over cap-and-trade is concise and accurate:

A tax is “the easiest method, the fastest and the most equitable,” Williamson said, because cap and trade systems tend to be more costly for companies to manage and create regional imbalances that would likely lead to federal lawsuits. “I’ve made the joke before that Wall Street would likely lose its interest in the environment if there wasn’t money to be made from a trading opportunity.” Dynegy Listens to Dissent, March 29, 2007.

Lewis Hay III, Chief Executive of FPL Group: According to a news article announcing that FPL would be promoting a ”carbon fee” that would be tacked on to fossil fuel charges based on the amount of carbon dioxide released from burning them, Hay “believes such a fee, set at a reasonable level and gradually increased, would create market pressures encouraging emission cutbacks not just on utilities but across the economy — but it should be done in a way that is friendlier to industries, businesses and consumers than the ‘cap and trade’ scheme dominating discussions in Congress.” Hay stated that “cap and trade” would result in a “giant food fight over these [carbon] allowances,” invite fraud, such as that which has marred similar programs in Europe, and result in volatile carbon pricing. According to Hay, ”We think the big winners in a trading scheme will all be the investment bankers.” FPL Suggests Carbon Fee to Control Gas Emissions, MiamiHerald.com, March 31, 2007.

Paul Anderson, former Chairman and CEO, Duke Energy

I believe U.S. public policy on global climate change should encourage a transition to a ower-carbon-intensive economy through a broad-based, mandatory approach. And, I believe the best approach is a carbon tax … A well-crafted carbon tax would do three things: First, it would provide incentives for conservation for everyone. Second, it would promote higher utilization of today’s power plants that are low emitters of carbon and encourage low-carbon fuel choices for the future. And third, it would encourage the development of new technologies. The greatest attraction of a carbon tax is that it allows us to share the cost of reducing greenhouse gas emissions across all sectors of the economy – minimizing the disruption in any one area.

(Address, Charlotte Business Journal, 10th Annual Power Breakfast, April 7, 2005)

Mr. Anderson was Chairman and CEO of Duke Energy at the time of his address. In an earlier interview, Mr. Anderson called a carbon tax a “no-regrets approach”:

Probably if you look at the position of industry in the past, it’s been very opposed to something like a carbon tax, but then I think in the past the reality that something was going to have to be done was not quite so evident. The nice thing about a carbon tax is if you accept that there still is a debate as to whether or not man-made CO2 is contributing dramatically to global warming, even if you don’t believe that, and there’s still some people out there that don’t, a carbon tax is a no-regrets approach to it; you haven’t shut down an industry, you haven’t penalised a fuel unduly, you’ve simply sent economic signals out there that, at the end of the day, the worst thing that happens, you have a little conservation.

(Interview, Sunday Sunrise (Austrailia), March 13, 2005)

T. Boone Pickens, oil and gas industry leader and philanthropist, “proposes that we increase gasoline taxes enough to raise the price of gasoline to $5 a gallon and use the revenues to cut the payroll taxes paid by employees and employers.” (Quote from an op-ed by Robert Walker, Global Warming Response – Markets or Taxes? in the San Francisco Chronicle, March 23, 2007)

Glenn Cannon, former General Manager, Waverly Light and Power, and Past Chair of the American Public Power Association: “To me, a carbon tax make the most sense in any strategy where we want to achieve meaningful reductions in all sectors of the economy.” (Email message to Carbon Tax Center, March 12, 2007)

Former American Petroleum Institute Chief Economist Michael Canes combined support for taxing carbon and criticism of carbon cap-and trade in a July 24, 2007 interview with E&E TV. From the transcript:

What’s wrong with cap and trade is that it’s very wasteful. It’s going to result in a lot of constraints on the economy. It’s going to result in volatility of energy prices that is unnecessary. It is going to create a source of wealth for people to lobby for and for the political sector to distribute. And that’s going to result in socially wasteful activity to try to redistribute wealth among parties, including not just within the United States but from abroad as well. And lastly, it’s going to have to have a monitoring system. Cap and trade requires policing, and not just in the United States, but internationally, because it will become an international system very quickly. So, in my opinion, it is going to be wasteful. Many, many billions of dollars will go into the construct of this system and it’s not necessary. There are better alternatives on the table.

Now, why is [cap and trade] politically popular even though it appears to be a more efficient system than other systems? The reason is because it does create a source of wealth. And that means that the business sector sees possibilities of obtaining part of that wealth. And so they view this favorably. The political sector sees ways to distribute that wealth and so it has attractiveness to the political sector. It will result in organized exchanges to exchange these allowances to emit. And those who would set up such exchanges see this as favorable. And ultimately the environmental community finds it favorable because a cap is a cap, and you have a quantitative limit on how much can be emitted. This is a mistake on their part. And the reason for that is the annual rate is not what counts. It is the total stock of greenhouse gases that are in the atmosphere that matters. And whether the rate is a little higher or a little lower really doesn’t matter in any given year. But the environmental community likes the certainty and that’s why they favor it.

I can accept that stronger measures might be necessary and if so, then in my view a carbon tax would be the way to go. A tax on carbon is much neater. The revenues from the carbon tax are kept inside the United States. You set it at a level that tries to approximate the costs that carbon is imposing on the world, you might say. It efficiently gets people to economize on carbon. If revenues can be redistributed, say through other kinds of tax reduction, you can actually improve the efficiency of the tax system. The people at Resources for the Future estimate somewhere between $15 and $25 billion annually in gains from a $7 to $15 carbon tax per ton. So you can improve the economy, it’s a more efficient system. You don’t have this creation of wealth that people begin to try to lobby for and the people try to distribute. You don’t have to deal with international offsets which requires monitoring worldwide of who is producing what in the way of offsets. Are they real? Should they count or should they not? A very expensive way to go. You can avoid all that with a carbon tax and that is the way I think we should go if we’re going to take more serious action than voluntary behavior.

I have not seen [a specific legislative proposal] that quite fits these parameters. I know that Congressman Dingell has proposed a tax, at least conceptually, on carbon. I think his purpose is to see whether or not such a tax could fly. But it’s how you pose the alternatives. If you say let’s have a tax or let’s not have a tax, many people in the public will oppose the tax, no question. If you say let’s have a tax that has redistribution, via reduction of other taxes at least equal so that its revenue neutral or even possibly a small tax decrease, a kind of a sweetener, to get people to kind of agree to this, then I think this could fly politically.

Economists

This is one of half-a-dozen pages compiling expressions of support for carbon taxes (or more targeted taxes, e.g., on gasoline) by notable individuals and organizations. To access other pages with different supporter categories, click on the Progress link on the navigation bar and move to the desired category.

Economists comprise the most vocal — even vociferous — community of carbon-tax supporters. This is unsurprising, insofar as “one of the first principles of economics — perhaps the most important — is that people respond to incentives,” and a carbon tax is the embodiment of incentives, provided its level is sufficiently robust.

The quote above is taken from Harvard economics professor Greg Mankiw, whom we designate below as one of the two most persistent and persuasive pro-carbon-tax economists. The other is Cornell economics professor Robert H. Frank.

We begin by referencing the 68-page Report of the High-Level Commission on Carbon Prices composed by a 13-member council of luminaries supported by the Carbon Pricing Leadership Coalition and published in May 2017 by the World Bank.

A strong carbon price is essential to meeting the goals of the Paris Climate Agreement, according to this new (2017) report.

The 13-member council was chaired by Nobel Laureate Joseph Stiglitz (U.S.) and Lord Nicholas Stern (U.K.) and was drawn from seven other countries as well: Brazil, France, China, India, Indonesia, Mali and South Africa.

The report “identif[ied] the range of carbon prices that, together with other supportive policies, would deliver on the Paris climate targets agreed by nearly 200 countries in December 2015,” according to the council’s press release, which was issued under the title, Leading Economists: A Strong Carbon Price Needed to Drive Large-Scale Climate Action. It found that “meeting the world’s agreed climate goals in the most cost-effective way while fostering growth requires countries to set a strong carbon price, with the goal of reaching $40-$80 per metric ton of CO2 by 2020 and $50-100 per metric ton by 2030.”

The report stated that “a well-designed carbon price is an indispensable part of a strategy for efficiently reducing greenhouse gas emissions while also fostering growth [and] that a strong and predictable carbon-price trajectory provides a powerful signal to individuals and firms that the future is low carbon, inducing the changes needed in global investment, production, and consumption patterns.”

“Specific carbon price levels will need to be tailored to country conditions and policy choices,” said Commission member, Professor Harald Winkler of the University of Cape Town, South Africa. “Carbon pricing makes sense in all countries, but low-income countries, which may be more challenged to protect the people vulnerable to the initial economic impacts, may decide to start pricing carbon at a lower level and gradually increase over time.”

Other broad expressions of economists’ support for carbon taxing

In an April 1, 2012 column in The New York Times, Prof. Richard H. Thaler of the U-Chicago Booth School of Business aptly summed up the near-unanimity among economists that carbon taxing is the optimal way to reduce CO2 emissions: “Consider a recent poll of a panel of economists conducted by the University of Chicago Booth School of Business, where I teach… [Forty-one] economists in [a poll conducted by the] University of Chicago … were asked whether they agreed with this statement: ‘A tax on the carbon content of fuels would be a less expensive way to reduce carbon-dioxide emissions than would a collection of policies such as ‘corporate average fuel economy’ requirements for automobiles.’ On this question, there was just a single negative vote.” (Why Gas Prices Are Out of Any President’s Control).

In 2011, The Economist asked, Do All Economists Favour a Carbon Tax?

Carbon emissions represent a negative externality. When an individual takes an economic action with some fossil-fuel energy content—whether running a petrol-powered lawnmower, turning on a light, or buying bunch of grapes—that person balances their personal benefits against the costs of the action. The cost to them of the climate change resulting from the carbon content of that decisions, however, is effectively zero and is rationally ignored. The decision to ignore carbon content, when aggregated over the whole of humanity, generates huge carbon dioxide emissions and rising global temperatures.

The economic solution is to tax the externality so that the social cost of carbon is reflected in the individual consumer’s decision. The carbon tax is an elegant solution to a complicated problem, which allows the everyday business of consumer decision making to do the work of emission reduction. It’s by no means the only economically sensible policy response to the threat of climate change, but it is the one we’d expect economists to embrace.

Economists overwhelmingly support a well-designed national carbon tax. In 2012, a University of Chicago survey asked 40 prominent economists from across the political spectrum whether they would prefer the government to raise revenue through traditional income taxes or via a national carbon tax. Not one chose the income tax approach.

Finally, we have: A majority of economists polled by the Wall Street Journal during Feb. 2-7, 2007:

The government should encourage development of alternatives to fossil fuels, economists said in a WSJ.com survey. But most say the best way to do that isn’t in President Bush’s energy proposals: a new tax on fossil fuels. Forty of 47 economists who answered the question said the government should help champion alternative fuels. “Economists generally are in favor of free-market solutions, but there are times when you need to intervene,” said David Wyss at Standard & Poor’s Corp. “We’re already in the danger zone” because of the outlook for oil supplies and concerns about climate change, he said. A majority of the economists said a tax on fossil fuels would be the most economically sound way to encourage alternatives. A tax would raise the price of fossil fuels and make alternatives, which today often are more costly to produce, more competitive in the consumer market. “A tax puts pressure on the market, rather than forcing an artificial solution on it,” said Mr. Wyss. (WSJ, Is It Time for a New Tax on Energy?, Feb. 8, 2007; the foregoing text is lifted directly from the article.)

Two standout pro-carbon-tax economists: Greg Mankiw and Bob Frank

Two Ivy League university economics professors occupying somewhat opposing positions on the usual left-right spectrum are arguably their profession’s most ubiquitous advocates for taxing carbon emissions.

Gregory Mankiw (Harvard), a proud centrist (or right-of-centrist), is a distinguished pedagogue and political adviser. He chaired President George W. Bush’s Council of Economic Advisers (2003-2005) and was senior economic advisor to the 2012 Romney for President campaign.

Robert H. Frank (Cornell), author of The Winner-Take-All Society and The Darwin Economy, and, in 2020, Under the Influence: Putting Peer Pressure to Work ranks with Mankiw in his unceasing and imaginative advocacy of carbon and other “Pigovian” taxes. He also carries on Thorstein Veblen’s critique of “conspicuous consumption,” framing it as an argument for sharply higher taxes on wealth.

Mankiw

In a Sept 2020 column in the NY Times Sunday business section, Pay People to Get Vaccinated, Mankiw used carbon taxing as a template to support the proposal by Brookings Institution economist Bob Litan for the U.S. government to achieve high Coronavirus vaccination rates by paying Americans to take a prospective vaccine. Mankiw wrote:

Immunology, meet economics. One of the first principles of economics — perhaps the most important — is that people respond to incentives. Applying this principle to the case at hand, Mr. Litan recommends that the government pay $1,000 to whoever gets the vaccine. With a large enough incentive, most Americans are likely to get vaccinated.

This proposal is textbook economics. (I’ve written some of the textbooks.) As all economics students learn, when an activity has a side effect on bystanders, that effect is called an externality. In the presence of externalities, the famous theorems of economics that justify laissez-faire do not apply. Adam Smith’s vaunted invisible hand can no longer work its magic.

A classic example of a negative externality is pollution, and the simplest and least invasive policy solution is a tax on emissions. In economics-speak, such a tax internalizes the externality: It induces polluters to take the cost of pollution into account by giving them a financial incentive to cut emissions. That’s why I have written here many times that a tax on carbon emissions is the best way to deal with global climate change.

Vaccination confers a positive externality. When you get vaccinated, you benefit not only yourself but also your fellow citizens by helping society take a step toward herd immunity. In this case, internalizing the externality requires not a tax but a subsidy, as Mr. Litan suggests.

(emphases added)

In 2019, announcing his switch of party affiliation from Republican to independent in The New York Times (‘Republican Economist’ Sheds a Party Label, Nov. 17, 2019 print edition), Mankiw spelled out what he wanted in political candidates’ platforms:

A Market-Based Approach to Climate Change: The consensus of scientists is that climate change is a serious threat. We need to respond but in a way that avoids rigid government regulation. The solution is a carbon tax, with all revenue rebated as carbon dividends. Putting a price on carbon would give everyone an incentive to reduce their carbon footprint.

In late 2012, Mankiw wrote in a NY Times op-ed, Wishful Thinking and Middle-Class Taxes (Dec. 29, 2012):

Ultimately, unless we scale back entitlement programs far more than anyone in Washington is now seriously considering, we will have no choice but to increase taxes on a vast majority of Americans. This could involve higher tax rates or an elimination of popular deductions. Or it could mean an entirely new tax, such as a value-added tax or a carbon tax. (emphasis added)

While that was only a mild endorsement of a carbon tax, the timing was noteworthy, coming in the late stages of the “fiscal cliff” negotiations and less than two months after Romney’s defeat in an election campaign in which he had belittled concerns over climate disruption.

Years earlier, Mankiw powerfully made the case for a carbon tax in an op-ed, One Answer to Global Warming, in the Sept. 16, 2007 NY Times Sunday Business Section (see our blog for excerpts and discussion). His 2006 Wall Street Journal op-ed pieces (Jan. 3 and Oct. 20) are among the many lively pieces available on Mankiw’s pro-fuel-tax blog, The Pigou Club Manifesto. (Economist Arthur Pigou, 1877-1959, developed the concept of economic externalities along with corrective “Pigovian” taxes.) On the last day of 2006 Mankiw reiterated his 2006 New Year’s Resolutions from his Jan. 3, 2006 WSJ piece, including:

I will tell the American people that a higher tax on gasoline is better at encouraging conservation than are heavy-handed CAFE regulations. It would not only encourage people to buy more fuel-efficient cars, but it would encourage them to drive less, such as by living closer to where they work. I will tell people that tolls are a good way to reduce traffic congestion — and with new technologies they are getting easier to collect. I will advocate a carbon tax as the best way to control global warming.

In a Sept. 16, 2006 post to his blog, Rogoff Joins the Pigou Club, Mankiw listed some three dozen other economists and pundits who have publicly advocated higher Pigovian taxes, such as gasoline taxes or carbon taxes. The list includes, in addition to several individuals mentioned here, such notables from economics, finance and journalism as Alan Greenspan, Gary Becker, William Nordhaus, Richard Posner, Anthony Lake, Martin Feldstein, Gregg Easterbrook and Lawrence Summers. (Links are included.)

In a June 1, 2008 NY Times column, The Problem With the Corporate Tax, Mankiw wrote:

I have a back-up plan for [Sen. McCain]: increase the gasoline tax. With Americans consuming about 140 billion gallons of gasoline a year, a gas-tax increase of about 40 cents a gallon could fund a corporate rate cut, fostering economic growth and reducing a variety of driving-related problems. Indeed, if we increased the tax on gasoline to the level that many experts consider optimal, we could raise enough revenue to eliminate the corporate income tax. And the price at the pump would still be far lower in the United States than in much of Europe.

In early 2012, Mankiw wrote in his NY Times column, A Better Tax System (Instructions Included):

Tax Bads Rather Than Goods: A good rule of thumb is that when you tax something, you get less of it. That means that taxes on hard work, saving and entrepreneurial risk-taking impede these fundamental drivers of economic growth. The alternative is to tax those things we would like to get less of. Consider the tax on gasoline. Driving your car is associated with various adverse side effects, which economists call externalities. These include traffic congestion, accidents, local pollution and global climate change. If the tax on gasoline were higher, people would alter their behavior to drive less. They would be more likely to take public transportation, use car pools or live closer to work. The incentives they face when deciding how much to drive would more closely match the true social costs and benefits. Economists who have added up all the externalities associated with driving conclude that a tax exceeding $2 a gallon makes sense. That would provide substantial revenue that could be used to reduce other taxes. By taxing bad things more, we could tax good things less. (Jan. 22, 2012)

Frank

We present this sampling from Prof. Frank’s columns in the NY Times Sunday business section:

Reducing CO2 emissions would actually be surprisingly easy. The most effective remedy would be a carbon tax, which would raise the after-tax price of goods in rough proportion to the size of their carbon footprint. Gasoline would become more expensive, piano lessons would not. The functional equivalent of that — a cap-and-trade system — worked spectacularly well when Congress required marketable permits for discharging sulfur dioxide (SO2) in 1995. Acid rain caused by SO2 emissions quickly plummeted, at about one-sixth the cost predicted. Once people have to pay for their emissions, they find ingenious ways of reducing them. (Shattering Myths to Help the Climate, Aug. 2, 2014)

Although an effective solution will take global coordination, America’s inaction has been a major barrier to progress. If the United States and Europe each adopted a steep carbon tax, they could elicit broader cooperation through heavy tariffs on goods produced in countries that failed to do likewise. India and China need access to our markets, giving us enormous leverage. (Shattering Myths to Help the Climate, Aug. 2, 2014)

NO one enjoys paying taxes — and no politician relishes raising them. Yet some taxes actually make us better off, even apart from the revenue they provide for public services. Taxes on activities with harmful side effects are a case in point. (Heads, You Win. Tails, You Win, Too., Jan. 5, 2013)

[W]e could insulate ourselves from catastrophic [climate] risk at relatively modest cost by enacting a steep carbon tax. Early studies by the Intergovernmental Panel on Climate Change estimated that a carbon tax of up to $80 per metric ton of emissions — a tax that might raise gasoline prices by 70 cents a gallon— would eventually result in climate stability. But because recent estimates about global warming have become more pessimistic, stabilization may require a much higher tax. How hard would it be to live with a tax of, say, $300 a ton? If such a tax were phased in, the prices of goods would rise gradually in proportion to the amount of carbon dioxide their production or use entailed. The price of gasoline, for example, would slowly rise by somewhat less than $3 a gallon. Motorists in many countries already pay that much more than Americans do, and they seem to have adapted by driving substantially more efficient vehicles. (Carbon Tax Silence, Overtaken by Events, Aug. 25, 2012)

Taxes are … a far cheaper and less coercive way to curtail [harmful] behavior than laws or prescriptive regulations. That’s because taxes concentrate harm reduction in the hands of those who can alter their behavior most easily. When we tax pollution, for instance, polluters with the cheapest ways to reduce emissions rush to adopt them, thereby avoiding the tax… Every dollar raised by taxing harmful activities is one dollar less that we must raise by taxing useful ones. The resulting revenue would enable us to reduce not only the federal deficit, but also the highly regressive payroll tax. And cutting that tax would stimulate hiring and help low-income families meet the burden of new taxes on harmful activities. (Find the Taxes That Do Double Duty, Feb. 18, 2011)

In 2012, Frank used the Obama-Romney presidential race to argue for both carbon emissions pricing and congestion pricing as ways to improve economic efficiency and well-being by taxing the externalities of carbon pollution traffic and traffic congestion. In Nation’s Choices Needn’t Be Painful (Sept 22, 2012), Frank pushed back against the then-prevailing view that “the nation face[d] difficult economic choices:

Consider highway congestion. Because drivers can generally enter a congested highway without charge, they often do so — thus adding to the crowding. But many drivers would willingly pay a fee for using that road if it resulted in fewer delays. A modest congestion fee, administered with E-ZPass-style technology, would raise needed revenue and provide an incentive to use crowded roads only when the benefits outweigh the social costs.

Critics object that such fees would harm low-income households. But because the gains far exceed their price, we can redistribute them so that everyone comes out ahead. Some of the new revenue, for example, could support tax relief for low-income households.

Similar spillover effects pervade the economy. People have little incentive to consider the danger of carbon emissions, for example, or the risks that the heavy vehicles they drive are posing to others. Taxing carbon emissions and taxing vehicles by weight would expand the economic pie by curtailing activities that do more harm than good. And because some of the resulting revenue could help low-income families, these taxes, too, needn’t be painful.

In the same 2012 op-ed, Frank ingeniously  parried the concern over raising taxes, even through externality pricing, at a time of economic stagnation:

Approving [externality taxes] now and scheduling them for phase-in only after the economy rebounds would serve two objectives. First, anxious credit markets would be reassured about the nation’s capacity to pay down government debt. And second, the delayed new taxes would speed the recovery by encouraging immediate increases in private spending.

With a carbon tax on the horizon, businesses would rush to develop technologies for adapting to higher energy prices. And consumers would accelerate major purchases to escape the looming consumption tax. The economy would get just the infusion of spending it needs — without the government’s having to spend a penny.

More recently, in August 2020, Frank took dead aim at “the fear that emissions would fall too slowly in response to a carbon tax” in another Times Sunday business column, Behavioral Contagion Could Spread the Benefits of a Carbon Tax:

[C]ritics are correct that a carbon tax alone won’t parry the climate threat. It is also true that as creatures of habit, humans tend to change their behavior only slowly, even in the face of significant financial incentives. But even small changes in behavior are greatly amplified by behavioral contagion — the social scientist’s term for how ideas and behaviors spread from person to person like infectious diseases. And if a carbon tax were to shift the behavior of some individuals now, those changes would quickly spread more widely.

Frank invoked social science data on cigarette smoking (and avoidance), homeowners’ installation of solar-photovoltaic panels, and, in this passage, meat eating (and avoidance), to argue that taxes on carbon emissions will reverberate more powerfully than is generally assumed:

Behavioral contagion also has been shown to influence dietary choices. People often eat meat because they grew up with, and continue to live among, people for whom substantial meat consumption is the norm. Because meat has a large carbon footprint, a carbon tax would make it more expensive relative to plant-based foods.

The direct effect of this price change would be small. But as some people shifted the composition of their diets, others would find it easier to shift as well. In short order, these positive-feedback effects would produce more widespread shifts in eating habits. Behavioral contagion would similarly amplify initial responses to a carbon tax in virtually every other energy-intensive activity. (emphases added)

Behavioral contagion is the primary subject of Frank’s latest (2020) book, Under the Influence: Putting Peer Pressure to Work. From the publisher’s blurb:

Under the Influence explains how to unlock the latent power of social context. It reveals how our environments encourage smoking, bullying, tax cheating, sexual predation, problem drinking, and wasteful energy use. We are building bigger houses, driving heavier cars, and engaging in a host of other activities that threaten the planet—mainly because that’s what friends and neighbors do.

Frank describes how the strongest predictor of our willingness to support climate-friendly policies, install solar panels, or buy an electric car is the number of people we know who have already done so. In the face of stakes that could not be higher, the book explains how we could redirect trillions of dollars annually in support of carbon-free energy sources, all without requiring painful sacrifices from anyone.

Other economists, listed alphabetically

Alan Blinder, Federal Reserve vice-chairman 1994-1996 and Princeton Professor of Economics and Public Affairs.  In “The Carbon Tax Miracle Cure,” Blinder suggested on the editorial page of the Wall Street Journal (Jan. 31, 2011):

[A] carbon tax… should be enacted now [but] set at zero for 2011 and 2012. After that, it would ramp up gradually… What’s critical is that we lock in higher future costs of carbon today.

Once America’s entrepreneurs and corporate executives see lucrative opportunities from carbon-saving devices and technologies, they will start investing right away—and in ways that make the most economic sense… I can hardly wait to witness the outpouring of ideas it would unleash. The next Steve Jobs, Bill Gates and Mark Zuckerberg are waiting in the wings to make themselves rich by helping the environment.  Jobs follow investment, and we need jobs now.

Blinder recommends using carbon tax revenue to reduce the deficit and underscores the advantages of a carbon tax over other deficit reduction strategies:

[E]very realistic observer knows that closing our humongous federal budget deficit will require a mix of higher taxes and lower spending as shares of GDP. Forget about value-added taxes and other new levies you may have heard about. A CO2 tax trumps them all… reducing our trade deficit, making our economy more efficient, ameliorating global warming, and showing the world that American capitalism has not lost its edge.

Tyler Cowen, economics professor at George Mason University. Cowen also directs the Mercatus Center, “which studies how societies become and stay prosperous, and is coauthor of the blog Marginal Revolution.”

Phase out all forms of capital income taxation, including the corporate income tax, and replace them with a carbon tax, including a gasoline tax. “Savings and investment boost economic growth, but when it comes to energy, global warming threatens as a major problem and our dependence on Middle Eastern oil damages our foreign policy.  (Cowen’s “Economic Idea #4 that voters need to hear”; from Economic Ideas for Republicans, U.S. News & World Report, Oct. 18, 2006; however, that link was inactive as of August 2014.)

Herman E. Daly, professor in the School of Public Policy at the University of Maryland, foremost U.S. ecological economist, author of Ecological Economics, Steady-State Economics, Valuing The Earth, among other works:

Is it hard to come up with a reasonable [climate] policy? Not really — a stiff severance tax on carbon, levied at the well head, mine mouth, or port of entry, would go a long way by both reducing carbon use and giving an incentive for developing alternative carbon-free technologies. Yes, but how do we know what is the optimal tax rate, and wouldn’t it be regressive, etc.? … [T]ax the resource throughput (that to which value is added) and stop taxing value added. Tax bads (depletion and pollution), not goods (income). Does anyone imagine that we tax income at the optimal rate? Better first to tax the right thing and later worry about the “optimal” rate of taxation, compensation for regressivity, etc. People don’t like to see the value added by their own efforts taxed away, even though we accept it as necessary up to a point. But most people don’t mind seeing resource rents, value that no one added, taxed away. And the most important public good served by the carbon tax would be climate stability, brought about by the consequent reduction in use of carbon fuels and the incentive to invent less carbon-intensive energy sources. And much of the revenue from the carbon severance tax could be rebated to the public by abolishing other taxes, especially regressive ones. Climate Change: From ‘Know How’ to ‘Do Now’, Grist, Aug. 14, 2007.

Gilbert Metcalf, Tufts University economist, was appointed in March 2011 by President Obama to head the energy office at the Treasury Department. Metcalf is a prominent and effective advocate of revenue-neutral carbon taxes. In August of 2007, the World Resources Institute and the Brookings Institution jointly published a policy brief by Prof. Metcalf, outlining a national carbon tax paired with a partial refund of the payroll tax. The brief assesses the expected emissions reductions from a tax starting at $15 per metric ton of carbon dioxide whose revenue would be used to rebate the federal payroll tax on the first $3,660 of earnings per worker. This tax swap is both revenue-neutral and distributionally neutral. (Video of Prof. Metcalf’s 2008 presentation.)

With Prof. David Weisbach (Univ. of Chicago Law School), Prof. Metcalf authored “The  Design of a Carbon Tax”  (Harvard Environmental Law Review, 2009) addressing carbon tax design issues: the tax rate (including distributional issues, the use of the revenues, and tax rate changes), the tax base, and international trade concerns.

Paul Portney, Dean, Eller College of Management, Univ. of Arizona (and president, Resources for the Future, 1995-2005):

[W]e’re nuts not to have instituted gradually increasing controls on CO2 and other greenhouse gases. The worst-case scenario, especially for future generations, is too scary not to be taking some preventative measures now. A carbon tax is obviously the best way to deal with this problem. It would raise revenues the government will badly need to pay for Social Security and Medicare as old fogies like me begin to retire, as well as create incentives for energy conservation, emissions reductions, and clean technology innovation. (What Are the Biggest Environmental Challenges Facing the United States?, RFF Weekly Policy Commentary, Sept. 10, 2007)

Robert Reich, Professor of Public Policy at the Goldman School of Public Policy at the University of California at Berkeley, former Secretary of Labor and co-founder of The American Prospect :

What’s needed is a carbon tax — a tax on all fossil-based fuels that reflects their true social, political, and environmental costs. That should remain the goal, but as a practical matter it’s not going to happen any time soon. Republicans won’t enact a tax hike for any purpose. And right now congressional Democrats don’t have the intestinal fortitude, or the votes, to enact it on their own. (American Prospect Online Edition, Inherit the Windfall Feb. 7, 2007)

Economist Jeffrey Sachs, director of the Earth Institute at Columbia University:

The changeover to a sustainable energy system will take decades and will require carbon taxes and emission permits to create market-based incentives for companies and individuals to switch to new kinds of electrical power plants, new kinds of automobiles and ‘green buildings.’ (Miami Herald, We Must Reverse Global Warming, Feb. 23, 2007)

The world’s producers and consumers currently regard the air as a free dumping ground for carbon dioxide and other climate-changing greenhouse gases. We need to correct market forces—for example, by taxing carbon emissions that are offset by tax reductions elsewhere—in order to create the right incentives. (Time Magazine, March 24, 2008; direct link unavailable, but full text was published later that year in Petroleum World).

[T]here is a much better strategy than tradable [emission] permits. Each region of the world should introduce a tax on CO2 emissions that starts low today and increases gradually and predictably in the future. Part of the tax revenue should be channeled into subsidies for new low-carbon energy sources like wind and solar, and to cover the costs of developing CCS (Carbon Capture & Sequestration). These subsidies could start fairly high and decline gradually over time, as the tax on CO2 emissions rises and the costs of new energy technologies fall with more experience and innovation. With a long-term and predictable carbon tax and subsidy system, the world would move systematically toward low-carbon energy, greater energy efficiency, and CCS. (Economy Watch, Towards A Global Carbon Tax – A Better Way To Fight Climate Change?, March 4, 2013).

Robert J. Shapiro, former Undersecretary of Commerce for Economic Affairs

Mr. Shapiro, Commerce Undersecretary in the Clinton Administration, authored the American Consumer Institute’s Feb. 2007 report, Addressing the Risks of Climate Change: The Environmental Effectiveness and Economic Efficiency of Emissions Caps and Tradable Permits, Compared to Carbon Taxes. From the Executive Summary:

Carbon taxes would be a better response to the risks of global warming than emissions caps and tradable permits (commonly referred to as cap-and-trade)… [Carbon taxes] are much less vulnerable to evasion and market manipulation, providing a more stable and transparent system for consumers and industry alike. [Carbon taxes] do not create the price volatility and administrative problems associated with cap and trade.

In a June 2008 follow-on study, Addressing Climate Change Without Impairing the U.S. Economy: The Economics and Environmental Science of Combining a Carbon-Based Tax and Tax Relief, Shapiro calls for a federal carbon tax starting at $14 per metric ton of CO2 in 2010 and rising steadily to $50 in 2030 (equivalent to $82 with inflation). Shapiro concludes that the nearly revenue-neutral carbon tax would reduce CO2 emissions by 30% below non-taxed levels while shaving only eight-tenths of one percent off future (2030) GDP. The report was published by the U.S. Climate Task Force, a project of Shapiro’s Sonecon economic advisory company.

Joseph E. Stiglitz, Nobel laureate in economics and University Professor at Columbia University; formerly Chairman of President Bill Clinton’s Council of Economic Advisers and Senior Vice President and Chief Economist of the World Bank:

Not paying the cost of damage to the environment is a subsidy, just as not paying the full costs of workers would be… American firms are being subsidized—and massively so. There is a simple remedy: other countries should prohibit the importation of American goods produced using energy intensive technologies, or, at the very least, impose a high tax on them, to offset the subsidy that those goods currently are receiving. (A New Agenda for Global Warming, Economists’ Voice, July 2006)

Economic efficiency requires that those who generate emissions pay the cost, and the simplest way of forcing them to do so is through a carbon tax. There could be an international agreement that every country would impose a carbon tax at an agreed rate (reflecting the global social cost). Indeed, it makes far more sense to tax bad things, like pollution, than to tax good things like work and savings. Such a tax would increase global efficiency. Of course, polluting industries like the cap-and-trade system. While it provides them an incentive not to pollute, emission allowances offset much of what they would have to pay under a tax system. Some firms can even make money off the deal. Moreover, Europe has grown used to the concept of cap-and-trade, and many are loathe to try an alternative. Yet, no one has proposed an acceptable set of principles for assigning emission rights. (Showdown in Bali, Project Syndicate, Dec. 2007)

More recently, Stiglitz has decried the stalled UN climate negotiations as a “charade.”  Stigliz feels that the 2 decade-long attempt to allocate responsibility for reducing emissions among nations is doomed; he instead urges negotiators to shift to a price-based negotiation to set a global carbon tax:

Stiglitz’s plan is to set a single, global price for carbon dioxide, the most important greenhouse gas. The idea is to make it so expensive to use carbon that consumers and businesses voluntarily use less of it. Countries could raise the price of carbon either with a tax or with a domestic cap-and-trade system, Stiglitz says. In his vision, if a country didn’t set its carbon price high enough, hoping to gain a pricing advantage, other countries would be allowed to charge tariffs on its exports. He would throw in a green fund to compensate hard-hit poor countries. (Stiglitz Calls Climate Talks a ‘Charade,’ Pushes Plan C, Bloomberg, 7/10/15)

Lawrence Summers, Charles W. Eliot university professor (and former president), Harvard University (and Former Treasury Secretary):

[T]he U.S. must engage in an energy efficiency program that takes effect without delay and has meaningful bite. As long as developing countries can point to the U.S. as a free rider there will not be serious dialogue about what they are willing to do. I prefer carbon and/or gasoline tax measures to permit systems or heavy regulatory approaches because the latter are more likely to be economically inefficient and to be regressive.” (Financial Times, Practical Steps to Climate Control, May 28, 2007)

Paul Volcker, chairman of the U.S. Federal Reserve, 1979-1987: See discussion on our “Public Officials” page.

Janet Yellen, co-chair, G30 Working Group on Climate Change and Finance; chairman of the U.S. Federal Reserve, 2014-2018, vice-chair, 2010-2014:

Carbon pricing is key. All firms across our economy need to pay the price of polluting the planet. It will certainly affect the economics of fracking and coal — the idea is to drive that stuff out of business over time. Maybe it doesn’t sound pleasant to say, but that’s what has to happen. (The 39 Things Biden Should Do First on Climate Change, Bloomberg Green, Nov. 11, 2020)

Gary Yohe, IPCC “Fourth Assessment” chapter editor and Professor of Economics at Wesleyan University. Prof. Yohe presented on the economic rationale for carbon pricing at the Wesleyan “Pricing Carbon” Conference in Nov. 2010, and was profiled on this point in Yale 360 in Dec. 2008.

Public Officials

This page, featuring public officials, is one of half-a-dozen pages compiling expressions of support for carbon taxes (or more targeted taxes, e.g., on gasoline) by notable individuals and organizations. To access other pages with different supporter categories, click on the Progress link on the navigation bar and move to the desired category.

Biden Cabinet

Janet Yellen, Treasury Secretary-designate:

Carbon pricing is key. All firms across our economy need to pay the price of polluting the planet. It will certainly affect the economics of fracking and coal — the idea is to drive that stuff out of business over time. Maybe it doesn’t sound pleasant to say, but that’s what has to happen. (The 41 Things Biden Should Do First on Climate Change, Bloomberg Green, Nov. 11, 2020)

U.S. Senate

Senator Bernie Sanders (I-VT)

I Am Proud graphic _ from Oct 2015Senator Sanders introduced his Climate Protection and Justice Act last Dec. 9, just prior to the closing of the Paris Climate Summit. We discuss the bill here, but it has been in his presidential campaign that Sen. Sanders has put a carbon pollution tax on the political map, unabashedly championing the idea in the debates and criticizing former Secretary of State Hillary Clinton for not similarly making a carbon tax the centerpiece of her climate program.

 

In June 2016, Grist magazine posted a terrific campaign compendium, Our Favorite Bernie Sanders Moments, noting that Sanders called climate change the greatest threat to our national security and pulled Hillary Clinton to the left on climate and energy. Here are excerpts:

On taxing carbon: His climate change plan called for a carbon tax that will “tax polluters causing the climate crisis, and return billions of dollars to working families to ensure the fossil fuel companies don’t subject us to unfair rate hikes.” And it aimed for a 40 percent cut in emissions by 2030, compared to 1990 levels — a level of ambition on par with Europe’s.

On offshore drilling: The plan also called for ending offshore drilling, for the sake of energy security and the environment. “If we are serious about moving beyond oil toward energy independence, lowering the cost of energy, combating climate change, and cutting carbon pollution emissions, then we must ban offshore drilling,” it read.

On climate denial: “The reality is that the fossil fuel industry is to blame for much of the climate change skepticism in America,” Sanders says in his climate plan. In October, he joined those calling for the Department of Justice to investigate ExxonMobil’s climate obfuscation.

On Donald Trump’s climate denial: “How brilliant can you be?” mocked Sanders in front of a New Hampshire audience in January. “The entire scientific community has concluded that climate change is real and causing major problems, and Trump believes that it’s a hoax created by the Chinese. Surprised it wasn’t the Mexicans.” Trump, for his part, has a history of flip-flopping on climate.

On encountering a climate-denying teenager: “Thank you for your question. You’re wrong.”

On climate change as a security threat: In an October debate, Sanders said climate change was the greatest threat to U.S. national security: “The scientific community is telling us that if we do not address the global crisis of climate change, transform our energy system away from fossil fuel to sustainable energy, the planet that we’re going to be leaving our kids and our grandchildren may well not be habitable. That is a major crisis.” In a debate in November, Sanders said that “climate change is directly related to the growth of terrorism.” (PolitiFact later called out the causality here as Mostly False, but there are indeed some linkages between climate change and war.)

I want Secy Clinton to join me _ from June 2016On the Paris climate agreement: “While this is a step forward it goes nowhere near far enough. The planet is in crisis. We need bold action in the very near future and this does not provide that,” said Sanders in December. Clinton’s campaign chair John Podesta later used this statement to argue that Sanders wanted to back out of the Paris Agreement.

On keeping it in the ground: In November, he cosponsored the Keep It in the Ground Act of 2015, which would halt new coal leases on public lands and prohibit drilling on the outer continental shelf.

On the fossil fuel industry: “To hell with the fossil fuel industry.”

Grist noted that in March, the Climate Hawks Vote PAC ran a survey asking which candidate it should it endorse, and Sanders got 92 percent of the vote. “We need clean-energy leadership in the White House,” wrote the group it its subsequent endorsement of Sanders. “We need a climate revolution.”

Senator Sheldon Whitehouse (D-RI)

On Nov. 19, 2014, Senator Whitehouse, famous for his weekly floor speeches about the dangers of global warming, introduced the American Opportunity Carbon Fee Act which would impose a $42 per ton carbon tax, increasing annually at 2% above inflation. Senator Whitehouse’s price trajectory follows the Obama Administration’s central estimate of the “social cost of carbon,” the value of the harms caused by carbon pollution including falling agricultural productivity, damages to human health, and property losses from flooding.

The fee would be assessed on all coal, oil, and natural gas produced in or imported to the U.S. and also cover large emitters of non-carbon greenhouse gases and carbon dioxide from non-fossil-fuel sources.

All revenue generated by the carbon pollution fee – which could exceed $2 trillion over ten years – would be credited to an American Opportunity Fund to be returned to the American people.  Possible uses include:

  • Economic assistance to low-income families and those residing in areas with high energy costs
  • Tax cuts
  • Social security benefit increases
  • Tuition assistance and student debt relief
  • Infrastructure investments
  • Dividends to individuals and families
  • Transition assistance to workers and businesses in energy-intensive and fossil-fuel industries
  • Climate mitigation or adaptation
  • Reducing the national debt

Senator Whitehouse spoke at length about this legislation on the Senate floor in introducing it. Video of his remarks can be seen here, and text is available here. Senator Whitehouse re-introduced an updated version of his proposal in May 2015, which raises the initial tax level slightly, to $45 per ton of CO2.

Congressman John B. Larson (D-CT)

Rep. John B. Larson, an 8th-term representative from Hartford, introduced his American Energy Security Trust Fund Act in August 2008 with twelve co-sponsors. His bill would impose an upstream tax on emissions of carbon dioxide of $15/ton with the level increasing by at least $10/ton annually. CTC estimates this trajectory would reduce U.S. CO2 emissions by 1/3 within a decade. Larson proposes a tax shift, using carbon tax revenue primarily to rebate payroll taxes.  Here is CTC’s commentary on the Larson bill and here is the bill.  Larson sponsored and kicked off CTC’s 2008 House briefing on Carbon Taxes.

Former Public Officials

George P. Shultz, former Secretary of State

Mr. Shultz, U.S. Secretary of Labor under Pres. Nixon (1969-70), Treasury Secretary under Presidents Nixon and Ford (1972-74), and Secretary of State under Pres. Reagan (1982-89), a consummate member of the Washington establishment, co-chairs a task force at Stanford that is urging Republicans to support a carbon tax. (See Stanford’s George Shultz on energy: It’s personal, Stanford Report, July 2012).

Following is an excerpt from his op-ed, How to Gain a Climate Consensus, in the Washington Post, Sept. 5, 2007:

The use of economic incentives (caps and trading rights, and carbon taxes) is essential to avoid disastrously high costs of control. The cap-and-trade system has been highly successful in reducing sulfur dioxide emissions by electricity utilities in the United States. That system relies on a scientifically valid and accepted emission-measurement system used by a clearly identified and homogeneous set of utilities. Fortunately, such a careful system of measurement exists for a viable greenhouse gas regimen. The product of collaboration between the World Resources Institute and the World Business Council for Sustainable Development, these standards for accounting and reporting greenhouse gases should be duly understood and adopted. Even with clear units of account, however, large problems arise as the coverage and heterogeneity of the system grow. And for trading across borders, the system needs to be accepted among the trading partners. Scams are easy to imagine. No nation should be allowed to trade without a verifiable, transparent system of measuring and monitoring of reductions, and holding emitters accountable. In many respects, a straight-out carbon tax is simpler and likelier to produce the desired result. If the tax were offset by cuts elsewhere to make it revenue-neutral, acceptability would be enhanced.

Gregory Mankiw, former Chair, President’s Council of Economic Advisers

Click here for links to the many pro-carbon tax articles and blog posts by President George W. Bush’s chief economic adviser, 2003-2005.  Mankiw, who teaches at Harvard, is the convener of the “Pigou Club” which he describes as an elite group of of economists and pundits who support taxing pollution instead of productive activity.

Lawrence Lindsey, former Director of the National Economic Council  and Assistant to the President on Economic Policy under President George W. Bush

Recommending permanent tax cuts, Mr. Lindsey also recommends a “greenhouse emissions tax” as the source of funding. “Longer term, however, spending cuts or a new source of revenue would be needed. Given the agenda of the incoming administration, the best source of such funds would be a greenhouse emissions tax.” (From Lawrence Lindsey Joins the Schumpeter Club, Capital Commerce, in U.S. News & World Report, December 30, 2008.)

William Ruckelhaus, former Administrator, U.S. Environmental Protection Agency

According to Grist Magazine, Ruckelhaus favors a carbon tax over cap-and-trade, since a carbon tax like cap-and-trade would rely upon market forces to determine where reductions should occur, but government administration would be much simpler. “It has the desired effect … It moves consumption toward less carbon-intensive activities. It does everything a cap-and-trade system does, but it’s about ten times simpler. And about one-tenth as popular, which is why we don’t have it.” (Obama’s Preferred Bill: EPA’s first administrator is bullish on Obama, but not cap-and-trade, Grist, December 29, 2008.)

FAQs

Frequently Asked Questions and Answers about Carbon Taxes and the Carbon Tax Center

1. Who/what is the Carbon Tax Center?

CTC is a 501(c)3 non-profit that since 2007 has given voice to Americans who believe that taxing carbon pollution — the primary greenhouse gas — is imperative to reduce global warming. Co-founders Charles Komanoff and Dan Rosenblum brought to CTC a combined six decades of experience in economics, law, public policy and social change. CTC educates and informs policymakers, journalists and other opinion leaders, grassroots activists and the public about the need for significant, rising and equitable taxes on carbon emissions from fossil fuels. Though Dan has moved on, Charles remains as CTC director.

2. Why are carbon taxes essential?

The transformation of our fossil fuels-based energy system to reliance on energy efficiency, renewable energy and sustainable fuels won’t happen fast enough without carbon fees or taxes sending the appropriate persistent and rising price signals into every corner of the economy and every aspect of life. Or, in the words of Brookings economist (and carbon tax supporter) Adele Morris, “As long as burning dirt (i.e., fossil fuels) is the cheapest form of energy, that’s what we’ll do.” Conversely, raising fossil fuel prices with carbon taxes will motivate switches to clean energy across the economy by making it more economically rewarding to move to non-carbon fuels and energy efficiency.

3. How serious is the climate crisis?

Bill McKibben on Twitter _ temperature deviation thru June 2016 _ via Mashable _ 20 July 2016We agree with pioneering climate-scientist James Hansen that the continued buildup of greenhouse gases in Earth’s atmosphere has begun causing cataclysmic change in our planet’s climate and ecology. Denialists’ claims that global temperatures are receding are blatantly false; new records are set almost monthly, and both 2016 and 2015 smashed prior records (see graphic). Nor just sweltering summers but forest fires and die-off, drowned coastal regions, decimated food chains, spreading disease, economic devastation, warfare and massive migrations of humans and other species are all virtual certainties in the lifetimes of many people now living, unless the world makes sharp cuts in greenhouse gases.

4. How much of greenhouse gas emissions are from fossil fuel burning?

For the U.S., carbon dioxide released by burning oil, coal and natural gas makes up 82% of total greenhouse gas emissions (weighted by climate-change impact), according to the U.S. Department of Energy. The remainder is methane (9%, from landfills, coal mines, oil and gas operations and agriculture); nitrous oxide (5%, from burning fossil fuels and from certain fertilizers); refrigerants and other “engineered” chemicals (2%); and carbon dioxide from other sources (2%).

5. What is the U.S. share of world greenhouse gas emissions from fossil fuel burning?

The U.S. slipped behind China as the world’s largest emitter of carbon dioxide, the principal greenhouse gas, a decade ago. Nevertheless, the U.S. still accounts for nearly 20% of the world’s CO2 emissions from fuel-burning. Because Americans are less than 5% of world population, per capita we emit almost 5 times as much CO2 as the average non-American. The historical disparity is even greater, and because CO2 molecules persist in Earth’s atmosphere for around a century, our past emissions are disproportionately responsible for climate change now and in the future. On any moral calculus, the United States bears a heavy responsibility to cut emissions massively and rapidly.

6. Why does CTC support carbon tax shifting?

The potential carbon tax burden on low and moderate-income households can be averted by returning the tax proceeds to Americans. This can be done through periodic pro rata “dividends” or by reducing the tax burden of regressive taxes such as the federal payroll tax or state sales taxes (depending upon whether the tax is imposed at the federal or state level). Shifting the tax burden to pollution and pollution-generating activities will create powerful incentives to use less energy and emit less CO2 while simultaneously promoting tax equity and minimizing the impact of the carbon tax on those with lower incomes.

7. Why should we CTC support both carbon taxes and energy-efficiency standards?

Energy standards have improved energy performance by forcing product design changes in critical sectors such as major appliances and U.S.-made automobiles, as we noted in one of our most popular blog posts. Standard-setting takes a long time, however. Moreover, standards tend to be static whereas energy use is ever-evolving. Combining carbon taxes with efficiency standards will achieve far more than the latter alone by motivating manufacturers and builders to proactively maximize energy efficiency while giving consumers ongoing incentives to make cost-effective choices valuing efficiency in shopping, traveling and purchase of homes and other durables.

8. Why not just subsidize renewables?

Federal payments to wind generators for each kWh produced, accelerated depreciation allowances for solar photovoltaic cells, and state “Renewable Portfolio Standards” mandating purchases use of renewable power have helped jump-start these sectors, bringing down costs and establishing renewables as culturally viable and politically salient. But energy efficiency is just as vital. Unfortunately, subsidizing efficiency is impracticable due to the distributed and dispersed nature of energy efficiency investments and choices. Moreover, a carbon tax will help wind and solar power speed their rise from their 3% niche (as of 2017, when wind + solar accounted for 8% of U.S. electricity) to a majority share of energy. (For a full exploration of these issues, read CTC’s Jan. 2014 Comments to the Senate Finance Committee.)

9. Why not just withdraw fossil fuel subsidies?

Of course we should zero out tax breaks, lease loopholes and other giveaways to the fossil fuel industry, along with the bloated and unsupportable ethanol mandate. But the impact on U.S. fossil fuel use would barely be noticeable. Authoritative sources such as EarthTrack have placed the fossil fuel industry’s tax and fiscal subsidies at around $25 billion a year, a figure that pales beside the roughly $1,000 billion (one trillion dollars) paid annually for coal, oil and natural gas burned in the U.S. Do the math: withdrawing those subsidies would lead to at most a 2-3 percent rise in the market prices of fossil fuels — scant incentive to reduce their use and concomitant emissions of CO2.

10. Why not just let market forces lift fuel prices?

Market signals are too volatile in the short term and too weak in the long term to provide the incentives needed to rewire the U.S. for energy efficiency and renewables. Moreover, high prices alone, whether due to geological depletion or plain old gouging, line the pockets (and magnify the political power) of the energy industry and ravage the poor and middle class. They’re even counter-productive, since high prices, absent a carbon tax, unleash production of CO2-intensive “extreme” fossil fuels from tar sands, mountaintop detonation, and fracking. Only carbon taxes combine market correctives with protecting American families and our environment.

11. Why not let technology remove carbon pollution from coal-fired smokestacks?

Rather than take positions on competing technologies, CTC works to remedy the market failure that allows burning of gas, oil and coal without charging for the resultant climate damage. Thus, we neither favor nor oppose so-called “clean coal,” i.e., combustion of coal with carbon dioxide captured and sequestered from the atmosphere; though we’re not bullish on Carbon Capture and Storage in light of the considerable (~30-40%) oversizing of generating capacity and coal throughput required to process flue gas to safely remove 90% or more of the CO2. In any event, every serious carbon tax proposal has a provision to credit working CCS systems via a rebate or netback for CO2 demonstrably sequestered from release to the atmosphere.

12. Will a carbon tax lessen U.S. oil dependence?

You bet. Petroleum products account for around 45% of U.S. CO2 emissions from burning fuels (coal and natural gas are responsible for roughly 25% and 30%, respectively), so a carbon tax stiff enough to cut down heavily on CO2 will necessarily put a big dent in oil consumption. According to our own modeling, Rep. Larson’s bill would, by its tenth year in effect, reduce U.S. use of petroleum by nearly 20% below “business-as-usual” levels (i.e., without a carbon tax or equivalent price on carbon emissions).

13. Would taxing carbon be regressive?

Any flat tax is regressive, but the regressivity of a tax on carbon pollution could and should be minimized or even reversed by making sure a fair share of tax revenues flow to the less affluent. The key is that wealthier households use more energy, on average – they drive and fly more, have bigger (and sometimes multiple) houses, and buy more stuff that requires energy to manufacture and use. A majority of carbon tax revenues will come from families of above-average means, which creates a basis for “progressive tax-shifting”: transferring a portion of the tax burden from regressive taxes such as the payroll tax (at the federal level) and the sales tax (at the state level) onto pollution and pollution-generating activities. Another progressive approach is to rebate the carbon tax revenues equally to all U.S. residents — a national version of the Alaska Permanent Fund, which for decades has annually sent identical checks to all state residents from earnings on investments made with the state’s North Slope oil royalties. Because income and energy consumption are strongly correlated, most poorer households will get more back in rebates or tax savings than they pay out in the carbon tax. The Citizens Climate Lobby is the leading proponent of this “fee-and-dividend” approach.

14. How can impacts on poor families be lessened?

Impacts of carbon taxes on poor families can be lessened by: 1) progressive tax-shifting as just described; 2) pro-rata distribution of the carbon tax revenues to every U.S. resident (also described above); and/or 3) to the extent necessary, funding programs designed to help poorer households use less energy driving and at home. See Offsetting a Carbon Tax’s Costs on Low-Income Households (Congressional Budget Office, 2012).

15. How much revenue will carbon taxes generate?

A lot, if taxes on carbon pollution rise briskly enough to have the needed climate impacts. Rep. Larson’s bill would start modestly at $15 per ton of CO2. That $15 per ton CO2 tax would bring in $80 billion of revenue, which equates to around $250 per U.S. resident, or $1,000 for a family of four. (Thus, if carbon revenue are distributed as per capita “dividends,” that family receives $1,000. If that family uses less fossil fuel energy than average, their increased costs will be less than $1,000, so they’ll come out ahead.) Successive annual carbon tax increments adding $12.50 per ton will add to the annual revenue stream, though at a declining rate as CO2 emissions fall each year in response to the rising CO2 price. By the end of the tenth year, the annual revenue will be on the order of $440 billion. We estimate that this brisk rise in the cost of CO2 pollution will reduce U.S. emissions dramatically, by about 1/3.

16. How will carbon taxes be administered?

The tax will be levied at the wholesale level of the fuel supply chain, as far upstream as practicable. Electric generators will pay the mandated carbon tax to their coal or natural gas suppliers, who will forward the payment to the government; the generators will pass along the tax to the retail electric utility which in turn will charge it to customers – to the extent that market conditions allow. Similarly for petroleum products (e.g., gasoline, jet fuel, heating oil), with government collecting the tax from refiners or importers of refined petroleum products, and the taxes passed on to oil wholesalers and eventually to retail customers. This approach will maximize accuracy and incentives and minimize paperwork and leakage.

About 1,200 to 1,500 fossil fuel energy producers will pay carbon taxes. According to Jack Calder of EPA, whose paper “Administration of a U.S. Carbon Tax” forms Chapter 3 of “Implementing a US Carbon Tax: Challenges and Debates,” approximately 150 petroleum refineries, 500 – 800 coal producers (depending on the point of compliance) and about 500 natural gas distributors will be taxed. Gilbert Metcalf and David Weisbach offer more detail in The Design of a Carbon Tax (Harvard Environmental Law Rev, 2009). A January 2017 report from the U.S. Treasury’s Office of Tax Analysis, Methodology for Analyzing a Carbon Tax, is a superb (and mercifully brief, just 28 pages) guide to the nuts and bolts of administering a carbon tax.

17.Will carbon tax “dividends” be subject to federal income taxes?

It is likely that the carbon dividends (periodic payouts to households or individuals under a fee-and-dividend system) will count as taxable income. But the additional federal revenue from the taxes received on the dividend income could be added back to the dividend pool being divvied up and returned to households, thus preserving revenue-neutrality.

It is true that this will add a step or two to the Treasury’s bookkeeping; and that it would alter somewhat the distributive patterns from a pure (untaxed) dividend system. The net effect will probably make fee-and-dividend even more income-progressive, since wealthy individuals and households tend to pay a higher percentage of their gross income as taxes than non-wealthy taxpayers.

18. How will carbon taxes handle carbon sequestration? Plastics? Petrochemicals?

Offsetting credit will be provided to the extent the carbon dioxide is actually sequestered, in order to eliminate any disincentive to sequestration. Releases of CO2 from converting fossil fuels to plastics or petrochemicals in non-combustion processes will be taxed at the same level as CO2 emitted in the production of energy or for transportation purposes.

19. Will a carbon tax apply to nuclear power?

A carbon tax will only be imposed on the use or combustion of carbon and the resulting emission of carbon dioxide. A carbon tax would not be imposed directly on the generation of nuclear power, though of course it would apply to any CO2 released in mining, enriching and transporting uranium, in other uses ancillary to the generation of nuclear power (such as fuel used for back-up generation), and in storing radioactive wastes.

20. How high should carbon taxes go? How fast should they climb?

While carbon taxes will need to be rise briskly to create the required price incentives, they will need to be phased in to give individuals and businesses the opportunity to adjust. There’s no magic formula or perfect number, but a tax that grows fast enough to reduce CO2 emissions by 1/3 within a decade probably offers a viable combination of meaningful incentive and opportunity for adaptation. The $15 per ton of CO2 “starter tax” mentioned earlier, equating to around 14 cents a gallon of gasoline, fits the lower end of that range. At least as important as the tax level is the commitment to keep raising the tax, preferably annually, so that energy-critical decisions, from car-buying (Hummer vs. Prius) to home-buying (exurb vs. transit-oriented community) to factory locating (highway interchange vs. rail line), are made with carbon-appropriate price signals.

21. Must carbon taxes be global to work?

Though carbon taxes can be applied locally, nationally or globally, the eventual goal is a global tax. Not only is the climate crisis global in both scope and solution, but a global carbon tax will avert potential leakage by carbon emitters attempting to move their combustion of carbon from countries that tax carbon to those that don’t. U.S. carbon tax legislation should include border tax adjustments to help protect domestic industry from unfair competition and to tax imports of other nations until they enact their own taxes on carbon pollution. Still, let’s not make perfection the enemy of the good; carbon pollution should be taxed wherever possible.

22. Why a carbon tax instead of a cap-and-trade system?

Carbon taxes are superior to cap-and-trade programs for seven fundamental reasons:

  • Carbon taxes will lend predictability to energy prices, whereas cap-and-trade systems will only exacerbate price volatility that discourages investments in carbon-reducing energy efficiency and carbon-replacing renewable energy.
  • Carbon taxes can be implemented more quickly than complex permit-based cap-and-trade systems.
  • Carbon taxes are transparent and easily understandable, making them more likely to elicit public support than opaque and complex cap-and-trade.
  • Carbon taxes aren’t easily manipulable by special interests, whereas the complexity of cap-and-trade leaves it rife for exploitation by the financial industry.
  • Carbon tax revenues can be more or less guaranteed and integrated into state or federal fiscal policy, owing to their predictability, whereas the price-volatility of cap-and-trade precludes its being counted on as a revenue source.
  • Carbon taxes are replicable across borders, since the price “metric” embodied in a carbon tax is far more universal than the quantity-reduction metric underlying cap-and-trade.
  • Perversely, cap-and-trade discourages voluntary/individual carbon reductions, since those cause a lowering of prices of emission permits which undercuts low-carbon investments; carbon taxes are free of this unintended negative consequence.

23. How responsive is energy demand to the price of fuels?

That varies with the type of fuel, the expected persistence of the price change, and the availability of substitutes. The two forms of energy that economists have studied most intensively are gasoline (which in 2014 accounted for 20% of U.S. emissions of carbon dioxide) and electricity (39%).  From our own micro-economic analyses as well as a literature review, CTC believes a “price-elasticity” of 35% (or negative 0.35, in the jargon) is an appropriate assumption for gasoline demand, and 70% for electricity. These assumptions mean that drops in demand are less steep than rises in the fuel price but are still substantial. For all other fuel uses, ranging from diesel fuel for trucks and jet fuel for planes to home heating and industrial fuels — the overall price-responsiveness is probably greater than for gasoline but less than for electricity. (See more detailed discussion on our “Effectiveness” page.)

These estimates are “long-run” elasticities, meaning that price rises take years to fully affect demand. Households and businesses can’t overnight adjust their stocks of energy-using equipment (cars, major appliances, office layouts, etc.), nor can they instantly adapt location decisions that determine distances that people and goods travel. On the other hand, carbon taxes and the resulting relative rises in fossil fuel prices will induce reductions in carbon emission rates on the supply side. For example, higher coal prices due to carbon taxing will lead cost-minimizing power grids to more heavily dispatch lower-emitting natural gas power plants in the short run, and to switch increasingly to zero-carbon wind and solar generation over time.

24. What are the non-climate costs of using fossil fuels?

Fossil fuels burden human beings, communities and nature with enormous environmental and social damages apart from destabilizing climate. Chief among them are “traditional” air pollution such as car and truck exhaust and smokestack emissions; destruction of land and water from extracting and transporting fuels; and the militarism, economic inequality and political authoritarianism that is endemic to extractive economies (e.g., Saudi Arabia, Nigeria, Indonesia). Many researchers believe the magnitude of these and other “indirect” costs exceeds the “market” prices paid for coal, oil and gas.

25. What are the ancillary benefits of taxing carbon?

As the previous Q&A suggests, U.S. carbon taxes will deliver vast non-climate benefits by discouraging use of fossil fuels. These will range from better air quality and less strip-mining to reduced entanglement in the unstable and dangerous Middle East and a less powerful fossil fuel industry. Americans can also look forward to a slew of indirect benefits – for example, lighter road traffic arising from a decrease in vehicle-miles traveled, as families and businesses adapt to higher gasoline and diesel fuel prices by trimming their least essential trips and consolidating others.

26. Who favors carbon taxes?

Carbon taxes are supported by a diverse group of opinion leaders, pundits, scientists and economists. The task now is to broaden and deepen support for taxing carbon among both the political elites and the grassroots – and to do so in the face of concerted opposition from fossil fuel interests determined to preserve (and increase!) their sales rather than watch their sector, and profits, shrink as the carbon tax steadily diminishes sales and use of coal, oil and gas.

27. How have past fuel tax efforts fared in the U.S.?

Poorly. The idea of taxing energy to better reflect its full costs collides with Americans’ historical entitlement to cheap energy and the anti-tax ideology of the past 35 years, not to mention the political muscle of the fossil fuel industry. This triad helped kill the last big effort to tax energy — President Clinton’s Btu tax in 1993. Nevertheless, we’re optimistic that making the carbon tax revenue-neutral, with all revenue recycled via tax-shifting or returned via carbon tax dividends, can soften resistance. Indeed, as described in the next Q&A, polls now point to strong support for a revenue-neutral tax designed to combat climate change.

28. What does polling indicate about carbon taxes?

Poll-Graphic-Pie-Chart-Alt

Opinion polls increasingly find Americans grasping the need to address climate change and warming (oops) to a revenue-neutral carbon tax. A January 2015 poll by political scientists at Stanford University and Resources for the Future found that two-thirds of Americans support making corporations pay a price for carbon pollution, provided the revenues are redistributed, i.e., made revenue-neutral. (See graphic at left.)

More recently, in March 2016, nearly two-thirds (64%) of Americans polled told Gallup’s annual environmental poll that they are worried a “great deal” or a “fair amount” about global warming. That figure is up from 55% in March 2015 and is the highest reading since 2008, according to Gallup. (See graphic below.)

Gallup _ U.S. Concern About Global Warming at Eight-Year High _ annotated _ 18 March 2016Other results from the 2016 Gallup poll are equally striking. They show a record-high share of Americans stating that climate change poses a threat to them and their way of life; a record number agreeing that climate change is caused primarily by human activity; and climate concern climbing across the political spectrum.

There’s more about these two polls as well as earlier ones on our page on opinion polling.

29. What will a carbon tax look like to me?

On the one hand, just about everything requiring fossil fuels, from a drive in the country to imported produce, will cost more, with prices rising the most for activities or goods that use the most fossil fuels. But the upside is three-fold: (i) your tax reduction or dividend check will offset much, perhaps more than 100%, of those price increases; (ii) you’ll be able to minimize your tax bite by cutting down on fuel usage (e.g., shortening those country drives, buying locally-grown produce, purchasing “green power” from wind and solar cells); and (iii) Americans’ combined behavior changes in response to the carbon tax will go a long way toward protecting the climate and averting the cataclysmic consequences of unchecked global warming.

30. Who’s taxing carbon now?

See our Where Carbon Is Taxed page. Or, download Sightline Institute’s excellent 2014 report, All the World’s Carbon Pricing Systems in One Animated Map, with maps tracing the institution (and, in at least one instance, Australia, the rescission) of carbon taxing worldwide, as well as carbon pricing administered via cap-and-trade programs. The Sightline report includes helpful tables, too.

The most notable carbon tax in the Western Hemisphere remains that in British Columbia. Carbon dioxide emissions from that province, Canada’s third most populous, began to be taxed on July 1, 2008 at a rate of $10 (Canadian) per metric ton and were raised annually to reach the current rate of $30 per metric ton (which equates to just over 20 U.S. dollars per U.S. ton). (We assessed BC’s carbon tax in a December 2015 report.) Voters in Boulder (Colorado) passed a carbon tax referendum in 2006; while Boulder’s tax equates to just $7/ton and applies only to electricity, it nonetheless establishes an important precedent: the first climate-protecting tax ever levied in the United States. Citizens in Washington State and five other states are campaigning to enact statewide carbon taxes.

31. What’s the political strategy for winning carbon taxes?

An effective campaign for carbon taxes must be both intellectually sound and politically palatable. The key point: Taxing climate pollution is economically and morally preferable to taxing productive activity such as work, savings or investment. Instead of discouraging productive effort, initiative and investment as other tax burdens do, a tax on carbon pollution raises the cost of harmful activity and thereby encourages efficiency and renewable energy. Revenues from carbon taxes can fund “dividends” to all U.S. residents or be used to reduce existing taxes, shifting tax burdens onto pollution and pollution-generating activities. Framing taxes on carbon pollution as an embodiment of the “polluter pays” principle unites interests as diverse as environmental-justice advocates, free-market conservatives and classical economists. Sound design of the revenue side of carbon tax legislation will also ensure that people of limited means, who use less energy than average, are made better off, not worse.

32. What can I do to advance carbon taxes?

The big need now is to develop grassroots support for a carbon tax. Start talking about a tax on climate pollution at your local environmental, religious or civic group meetings. Subscribe to CTC’s occasional but timely emails by filling in the sign-up pop-up box on our home page. Join Citizens Climate Lobby, the vital and committed nationwide network of activists that is putting the revenue-neutral carbon tax known as “fee-and-dividend” (delightfully explained in CCL’s 2-minute video) on the policy map. And please donate to the Carbon Tax Center, via our on-line Donate page. It’s contributions from people like you that enable us to conduct research, work on advocacy, and share knowledge and hope on carbon taxing. Thank you.

Revenue-Neutral: Yes or No?

A “robust” carbon tax — one high enough to significantly change fuel incentives, drive innovation and transform our energy system and culture — is going to generate large amounts of revenue.

Fossil-fuel burning in the U.S. now (pre-pandemic, 2019) emits around 5 billion metric tons of carbon dioxide a year. A carbon tax set at the threshold of robustness — $50 per metric ton — would generate roughly $250 billion a year in new tax proceeds. That’s a significant figure by any measure. It equates to 6-7 percent of total U.S. tax proceeds (currently $3.86 trillion). Spread among the country’s 128.5 million households (as of 2017), it’s $1,950 a year.

Not surprisingly, “what to do with the carbon tax revenue” is the most contentious issue surrounding carbon tax proposals, especially for possible carbon taxes at the federal level where the tax rate could be higher and political divisions are starker.

Revenue-Neutral Carbon-Taxing

Revenue-neutral means that government retains little if any of the tax revenues raised by taxing carbon emissions. Instead, the revenues are returned to the public; with, perhaps, small amounts utilized to assist communities dependent on fossil-fuel extraction and processing to adapt and convert to low- or non-carbon economies.

There are two overlapping but nonetheless disparate reasons for structuring a carbon tax to be revenue-neutral.

One is to appeal to (or appease) voters and elected officials who claim to abhor government and thus don’t want to swell its coffers.

The other is to counter or at least minimize the natural regressivity of carbon taxes by returning revenue in a way that protects the less affluent, while preserving the tax’s price-incentive to reduce emissions. (Keep in mind that wealthier households use more energy, since they generally drive and fly more, have bigger (and sometimes multiple) houses, and buy more stuff that requires energy to manufacture and use.)

There are two primary approaches to returning or recycling the tax revenues.

One approach, discussed below in detail, returns revenues directly through regular (e.g., monthly) “dividends” to all U.S. households or residents. Every resident or household receives an equal, identical slice of the total carbon revenue “pie.” In this approach, which adherents at Citizens Climate Lobby call fee-and-dividend, each individual’s carbon tax is proportional to his or her fossil fuel use, creating an incentive to reduce; but everyone’s dividend is equal and independent of his or her usage, preserving the conservation incentive. Alaska’s dividend program has provided residents with annual allotments from the state’s North Slope oil royalties for three-and-a-half decades.

In the other revenue-return method, each dollar of carbon tax revenue triggers a dollar’s worth of reduction in existing taxes such as the federal payroll tax or corporate income tax — or, on the state level, sales taxes. As carbon-tax revenues are phased in (with the tax rates rising steadily but not too steeply, to allow a smooth transition), existing taxes are phased out. While this “tax-shift” is less direct than the dividend method, it too ensures that the carbon tax is revenue-neutral. It offers other important benefits, as well; for example, reducing payroll taxes could stimulate employment.

To repeat: each individual’s receipt of dividends or tax-shifts is independent of the carbon taxes he or she pays. That is, no person’s benefits are tied to his or her energy consumption and carbon tax “bill.” This separation of benefits from payments preserves the carbon tax’s incentive to reduce use of fossil fuels and emit less CO2 into the atmosphere. (Of course, it would be extraordinarily cumbersome to calculate an individual’s full carbon tax bill since to some extent the carbon tax would be passed through as part of the costs of various goods and services.)

Revenue-neutrality not only protects the poor, it’s also politically savvy since it offers a way to blunt the “No New Taxes” demand that has held sway in American politics for decades. Returning the carbon tax revenues to the public would also make it easier to raise the tax level over time, a point made nicely by McGill University professor Christopher Ragan in a 2008 Montreal Gazette op-ed, and subsequently borne out by the experience in British Columbia where a revenue-neutral carbon tax was ramped up in four annual increments; that tax remains politically popular and is driving down emissions.

In any event, either of the two “revenue return” approaches — carbon dividends and tax-shifting — can make carbon taxes income-progressive. Because income and energy consumption are strongly correlated, most poor households will get more back in their carbon dividends or via tax-shifting than they will pay in the carbon tax. The overall effect of a carbon tax could thus be equitable and even “progressive” (benefiting lower-earning households).

Revenue-Positive Carbon-Taxing (Investing in Alternatives)

It may seem axiomatic that carbon-tax revenues should fund renewable energy or efficiency upgrades. And that approach always polls well, making it politically attractive.

Nevertheless, climate and energy realities indicate that only a robustly-rising carbon tax can deliver the deep and broad CO2 emission reductions needed to avert climate disaster. Building public support and maintaining the fairness needed for such a substantial carbon tax can most easily be done if all or nearly all of the carbon-tax revenue is returned to taxpayers. See “Making a carbon tax income-progressive” and our blog post: “Which Carbon Tax: Robust or Miniature? (July 7, 2013)”

Dividends

(a/k/a Carbon Dividends or “Green Checks”)

One revenue treatment that is both income-progressive and appealingly straightforward is to return the revenues equally to all U.S. residents. This  so-called “dividend” would be a national version of the Alaska Permanent Fund, which since the 1970s has annually sent all state residents identical checks drawn from earnings on investments made with the state’s North Slope oil royalties. (For a federal carbon tax, the “dividend” checks should be provided quarterly or monthly to keep households ahead of the budget treadmill.)

The dividend approach was so attractive and elegant that the nation’s most energetic and active advocacy organization for carbon taxes has organized around it. That’s the Citizens’ Climate Lobby, which calls its approach carbon fee-and-dividend.

Fee-and-dividend explained, Canadian style. Hat tip to @scottsantens.

Fee-and-dividend explained, Canadian style. Hat tip to @scottsantens.

Nevertheless, it seems fair to say (and important to acknowledge) that by 2018, the second year of the Trump administration, fee-and-dividend has run out of political room. Not a single “sitting” (i.e., still in office) Republican member of Congress has publicly endorsed fee-and-dividend, even as a concept, let alone an actual bill. Yet the premise of fee-and-dividend has always been bipartisanship, since Democrats, with their preference for activist government, would accept a revenue-neutral carbon tax such as fee-and-dividend only if it delivered Republican votes.

For a decade, we wrote glowingly about fee and dividend — most recently in 2017 articles in The Nation and the Washington Spectator. We also praised the Climate Leadership Council’s “carbon dividend” proposal and advocacy in those two pieces and in numerous blogs (here, here, and here, inter alia). But as we wrote in June 2018, we believe that the time for carbon dividend proposals has probably passed. We wrote:

The [political] center to which Baker-Shultz (CLC) and fee-and-dividend (CCL) were designed to appeal barely exists. It’s not just that no sitting Republican has endorsed Baker-Shultz or indeed fee-and-dividend in any form. It’s also that the Democratic majority that will be needed to pass a carbon tax bill appears unlikely to rally around a revenue-neutral carbon tax, whether it’s organized as fee-and-dividend or some form of tax swap.

Economic Progressivity of Fee-and-Dividend

In 2016 CCL released a detailed paper examining how a carbon fee-and-dividend would impact U.S. households. The study took into account geographic variations in electricity sources and gasoline use and drew on a database of carbon intensity of expenditures for 5.8 million households to analyze the net effect of returning revenue to households on a modified per capita basis. Here are the major results:

Percentage of Households Benefitted by Income Quintile

Percentage of Households Benefitted, by Income Quintile

  • 53% of households (and 58% of individuals) would receive more in dividend payments than they would spend due to higher fossil fuel prices.
  • Another 19% of households would incur only a slight loss, defined as a net loss no larger than one-fifth of one percent of pre-tax income.
  • Nearly 90% of households below the poverty line would benefit an average of $311, an increase of roughly 2.8% of pre-tax income.
  • In contrast, the net loss for the top quintile of households would average $-322 or only -0.18% of pre-tax income.

Notably, these findings support a dividend plan’s ability to transform a carbon tax into a progressive policy that neutralizes the burden that lower-income households would otherwise face, directly and indirectly, due to higher fuel prices. CTC advocates a progressive distributional outcome for both pragmatic and ethical reasons: pragmatically, because a carbon tax will require broad, sustained, public and political support; and ethically, because it’s not tenable to solve the climate crisis on the backs of those who can least afford it.

A Caveat — CBO’s “haircut”

The non-partisan Congressional Budget Office routinely “scores” members’ bills for their prospective impact on tax revenues. To streamline its analyses, CBO long ago settled the so-called “CBO haircut” by which it assumes that one-quarter of indirectly raised revenues would need to be allocated from the tax proceeds in question in order to make up for reduced tax revenues collected from conventional sources such as personal or corporate income taxes. But modeling of carbon tax proposals consistently finds that when revenue is strategically returned by reducing other taxes that tend to slow down economic activity, the net negative impacts are much lower than CBO’s 25% assumption and in some cases may be eliminated altogether. While returning revenue as “dividends” (which economists call “lump-sum rebates”) offers less potential to reduce economic drag than tax shifts, CBO’s assumption still seems like an over-estimate.

In any event, rigid application of the 25% CBO haircut could, on paper at least — and, likely, in Congressional deliberations — limit the carbon tax revenue perceived to be available for “dividends” to 75%. Yet even with this reduced fraction of revenue, returning carbon tax revenue via a direct dividend represents a simple and income-progressive means to make carbon taxes distributionally fair; though with the haircut, the share of households reaping a net benefit via an equal 75% dividend would be lower than the 58% of individuals mentioned above.

Related CTC blog posts

Related news reports and opinion pieces

Cogent opinion pieces by dividend proponent James K. Boyce (U-Mass, Amherst)

Tax-Shifting

The distribution of carbon tax burdens creates an opportunity for “progressive tax-shifting,” in which a portion of carbon tax revenue is dedicated to reducing regressive taxes such as the payroll tax (at the federal level) or sales taxes (at the state level). An early proponent of such a carbon tax shift was Al Gore, with his exhortation to “Tax what we burn, not what we earn.” Shifting taxes away from payroll and/or sales taxes and onto carbon pollution could raise, not lower, the after-tax incomes of a majority of below-median-income households, giving this approach a net progressive effect.

In addition to this potential progressive effect of tax shifting, a wide range of economists, [including Lawrence Goulder, Roberton Williams & Ian Parry, Gilbert Metcalf & David Weisbach, Alan Viard, Robert Shapiro, Donald Marron & Eric Toder] have concluded that use of revenue to reduce other taxes would improve the overall efficiency of the economy, for example, by removing burdens on work.

In October 2007, the Brookings Institution published a A Proposal for a U.S. Carbon Tax Swap — An Equitable Tax Reform to Address Global Climate Change by Tufts University economics professor Gilbert E. Metcalf, describing a national carbon tax paired with an income tax credit for payroll taxes paid. Metcalf assessed the impact of a tax of $15 per metric ton of carbon dioxide and five major greenhouse gases. Revenues would be used to credit payroll tax paid on the first $3,660 of earnings per worker. Metcalf showed that such a tax swap would be both revenue-neutral and distributionally-neutral. (Harvard professor and former Bush Administration economist Gregory Mankiw mentioned the Metcalf paper in a Sept. 2007 New York Times op-ed, discussed on our blog.) Rep. John Larson (D-CT) adopted Metcalf’s framework for his “America’s Energy Security Trust Fund Act,” discussed on our Bills page.

C tax revenue efficiency -- RFFMore recent analysis has confirmed the importance of carbon tax revenue wisely; using it to reduce other “distortionary” taxes can offer large enough efficiency benefits to reduce or even possibly eliminate the economic drag that a carbon tax would otherwise create. In Deficit Reduction and Carbon Taxes: Budgetary, Economic, and Distributional Impacts (2013) researchers from Resources for the Future found that using carbon tax revenue to reduce corporate income tax rates offers large enough efficiency benefits to more than overcome the efficiency loss of a carbon tax. The next best option is using revenue to cut wage taxes, while using revenue to cutting other consumption taxes is somewhat less efficient. Finally, refunding carbon tax revenue in a “lump sum rebate” (dividend) offers the least economic efficiency benefit.

Reducing the top marginal corporate income tax rate has been articulated as a goal by leaders of both major political parties. In an effort to attract Republican interest, Rep. John Delaney (D-MD) has introduced a carbon tax measure that would devote half its revenue to corporate income tax reduction.

Nevertheless, the growing economics literature on carbon taxes suggests a strong a tradeoff between the efficiency benefits of using carbon tax revenue to cut taxes on capital (as the Delaney proposal would do) and the distributional benefits of cutting taxes on labor (as Rep. Larson’s proposal would).

Related CTC blog posts and articles

Related journal articles and papers

 

Best Articles, Videos & Books

This page features a selection of articles, video clips and books from a variety of perspectives making the case for taxing climate pollution.

Articles

Let this be the year when we put a proper price on carbon

Lawrence Summers, who has served as Treasury Secretary, President of Harvard University and Chief Economist of the World Bank, trenchantly articulated the compelling reasons and auspicious timing for a carbon tax in an op-ed in both the Financial Times and the Washington Post (January 5, 2015). We offer some excerpts:

The case for carbon taxes has long been compelling. With the recent steep fall in oil prices and associated declines in other energy prices it is overwhelming. There is room for debate about the size of the tax and about how the proceeds should be deployed. But there should be no doubt that starting from the current zero tax rate on carbon, increased taxation would be desirable.

[T]hose who use carbon-based fuels or products do not bear all the costs of their actions. When we drive our cars, heat our homes or use fossil fuels in more indirect ways, all of us create these costs without paying for them. It follows that we overuse these fuels. While the recent decline in energy prices is a good thing in that it has, on balance, raised the incomes of Americans, it has also exacerbated the problem of energy overuse. The benefit of imposing carbon taxes is therefore enhanced.

[A] well-designed tax would be levied on the carbon content of all imports coming from countries that did not impose their own carbon levies. The United States can make the case that such a tax is compatible with World Trade Organization rules. Such an approach would have the virtue of encouraging countries who wished to avoid the U.S. tax to impose carbon taxes of their own, thereby further supporting efforts to reduce global climate change.

A U.S. carbon tax would… be a hugely important symbolic step ahead of the global climate summit in Paris late this year. It would shift the debate toward harmonized measures to raise the price of carbon use and away from the complex cap-and-trade-type systems that have proved more difficult to operate than expected in the European Union and elsewhere.

My preference would be for the funds to be split between investments in infrastructure and pro-work tax credits. An additional $50 billion a year in infrastructure spending would be a significant contribution to closing America’s investment gap in that area. The same sum devoted to pro-work tax credits could finance a huge increase in the earned-income tax credit, a meaningful reduction in the payroll tax or some combination of the two.

Progressives who are most concerned about climate change should rally to a carbon tax. Conservatives who believe in the power of markets should favor carbon taxes on market principles. And Americans who want to see their country lead on the energy and climate issues that are crucial to the world this century should want to be in the vanguard on carbon taxes. Now is the time.

Bigger, Cleaner, and More Efficient: A Carbon-Corporate Tax Swap

Donald Marron served as economic adviser to President G.W. Bush, acting director of the non-partisan Congressional Budget Office and executive director of the Joint Committee on Taxation. Marron now co-directs the Urban-Brookings Tax Policy Center. In a 2013 paper, he and Eric Toder analyzed the climate and macro-economic benefits of a carbon tax “shift” to reduce top corporate income tax rates. In the Cato Online Forum (November 2014) Marron outlined the conservative principles behind his proposal to combine effective climate policy with pro-growth economic policy:

Four recurring lessons from tax and environmental policy…

First, taxing bads is better than taxing goods. When the government levies a tax, people and businesses are less likely to do the taxed activity…

Second, putting a price on carbon is the most efficient way to reduce carbon emissions. In the absence of a national carbon price, as from a carbon tax or a cap-and-trade system, policymakers will likely continue to pursue piecemeal regulations and subsidies. Indeed, we see that today in heightened fuel economy standards and state-by-state electric power plant regulations. These regulatory efforts can reduce emissions, but at greater cost per ton than a national carbon price.

Third, the corporate income tax is especially distortionary… it discourages business investment and weakens economic growth… [T]he Organization for Economic Cooperation and Development identified corporate income taxes as having “a particularly negative impact on GDP per capita,” especially through their effect on “dynamic and innovative” businesses.

Fourth, America’s corporate income tax is especially problematic. The statutory tax rate is the highest in the world at more than 39 percent (including federal and state taxes) and the U.S. is one of only a few nations that taxes resident corporations on their worldwide income. At the same time, our corporate system includes many tax breaks that dramatically lower the effective rate some businesses really pay. This toxic mix benefits lawyers and accountants but has made the United States an unattractive place for many firms to maintain their legal residence. One symptom has been the recent increase in tax-driven inversions.

[A] carbon-corporate tax swap, paired with appropriate relief for low-income families, would make our economy bigger, cleaner, and more efficient.

A Carbon Tax Is Our Only Hope

In the edgy “Gawker” magazine (May 27, 2014), Hamilton Nolan trenchantly explained why, if we’re serious about tackling global warming, we need a stiff carbon tax to climate polluters:

Why does a pack of cigarettes cost fifteen… dollars in New York City? Because New York City uses taxes to add the future costs of smoking to the cost of smoking today. We know that smokers end up costing society a lot of money for health care years down the road; with cigarette taxes, smokers in the city pay those costs up front. The realization of the true cost of a negative behavior is quite an effective way to not only pay those costs, but also to change the behavior.

This is the basic rationale for a carbon tax. We know that carbon emissions are causing global warming, which will impose a disastrous cost on all of humanity in the years to come. So make those who emit carbon pay those costs up front, by taxing them…

There is no other tactic that will have as big an impact on carbon emissions within our 15-year window of opportunity for action. Forces that operate solely out of self interest will continue to oppose any and all sacrifices right up until the sea swallows their vacation homes. Forget them. The activists and political leaders who have genuine concern about this issue must all unite around some form of carbon tax as a solution. Fighting polluters on a piecemeal basis will not be enough. Public education campaigns will not be enough. Global warming must be made too expensive to be viable. Tax the hell out of it. It’s not unfair pricing. On the contrary, it is the only way to make carbon emissions exactly as expensive as they deserve to.

Science Is Unequivocal, Policy Is Obvious: Tax CO2 Pollution

New Yorker science writer and author of “Field Notes From a Catastrophe,” Elizabeth Kolbert linked the overwhelming climate science consensus to ith the equally robust climate economics consensus (April 14, 2014):

[T]he Intergovernmental Panel on Climate Change released its latest update on the looming crisis that is global warming. Only this time it isn’t just looming. The signs are that “both coral reef and Arctic systems are already experiencing irreversible regime shifts,” the panel noted… The I.P.C.C.’s list of potential warming-induced disasters—from ecological collapse to famine, flooding, and pestilence—reads like a riff on the ten plagues. Matching the terror is the collective shame of it. “Why should the world pay attention to this report?” the chairman of the I.P.C.C., Rajendra Pachauri, asked the day the update was released. Because “nobody on this planet is going to be untouched by the impacts of climate change.”

Economists on both sides of the political spectrum agree that the most efficient way to reduce emissions is to impose a carbon tax. “If you want less of something, every economist will tell you to do the same thing: make it more expensive,” former Mayor Michael Bloomberg observed, in a speech announcing his support for such a tax. In the United States, a carbon tax could replace other levies—for example, the payroll tax—or, alternatively, the money could be used to reduce the deficit. Within a decade, according to a recent study by the Congressional Budget Office, a relatively modest tax of twenty-five dollars per metric ton of carbon would reduce affected emissions by about ten per cent, while increasing federal revenues by a trillion dollars. If other countries failed to follow suit, the U.S. could, in effect, extend its own tax by levying it on goods imported from those countries.

All You Need to Know About British Columbia’s Carbon Tax Shift in Five Charts

Alan Durning and Yoram Bauman, of the Seattle-based Sightline Institute, graphically illustrated the economic and climate success of their northern neighbor British Columbia’s simple, revenue-neutral carbon tax (March 11, 2014):

BC’s carbon pricing system is the best in North America and probably the world. The province has finished the nitty-gritty work of drafting statutes and regulations to implement the system. Oregon and Washington could do worse than to copy them, word for word, into their tax codes, then make adjustments needed to match circumstances.

Economists Have A One-Page Solution to Climate Change

National Public Radio reporter David Kestenbaum neatly distilled why economists are virtually unanimous in concluding that well-designed carbon taxes offer a win-win for the climate and the economy that no other policy can beat (June 28, 2013):

This is why economists love a carbon tax: One change to the tax code and the entire economy shifts to reduce carbon emissions. No complicated regulations. No rules for what kind of gas mileage cars have to get or what specific fraction of electricity has to come from wind or solar or renewables. That’s by and large the way we do it now.

[MIT economist John] Reilly says the current web of rules is a more complicated and more expensive way of getting the same outcome as a carbon tax. The current system “pretty much is one of the worst ways we could do it,” he says.

… Reilly brings up what is perhaps the most surprising thing about a carbon tax: If you do it right, he says, carbon tax can be nearly painless for the economy as a whole.

Besides reducing carbon emissions, a carbon tax brings in a bunch of money — it’s a tax after all. So, Reilly says, you can reduce, say, income tax to balance out the new taxes people are paying for carbon emissions. People pay more for gas, but they get to keep more of their income.

Laura D’Andrea Tyson: The Myriad Benefits of a Carbon Tax

A Bill Clinton Council of Economic Advisers chair urged carbon taxes as more cost- and climate-effective than regulations and subsidies (New York Times, June 28, 2013)

Without a [carbon] tax, the government has to rely on second-best regulations to limit carbon emissions. Facing Congressional inaction and staunch opposition to a carbon tax, this week President Obama proposed regulations on carbon pollution standards for new and existing power plants using his executive authority under the Clean Air Act.

A carbon tax is also a cheaper and often more efficient way to reduce carbon emissions than subsidies for alternative fuels. Generous subsidies for biofuels have cost billions of dollars; by reducing the price of gasoline they may have perversely increased rather than decreased carbon emissions.

Other subsidies, like the production tax credit, have been successful at ramping up research, development and deployment of alternative energy technologies in recent years. Such subsidies would be even more effective in combination with a carbon tax that would make fossil fuels less price-competitive and would stimulate research on renewable and energy-saving technologies.

The Congressional Budget Office estimates that even a modest carbon tax could reduce both greenhouse emissions and the federal budget deficit. A tax of $20 per ton of carbon dioxide, which would translate to about 15 cents per gallon of gasoline, would reduce emissions by 8 percent and generate up to $1.2 trillion in tax revenues over 10 years.

“[A] Carbon tax…would make polluters pay for their own pollution”

As EPA began rolling out its proposed regulations on power plants, the Washington Post Editorial Board suggested a better way (May 7, 2013):

[A] carbon tax, an elegant policy Congress could immediately take off the shelf… would make polluters pay for their own pollution, which is the best way to encourage greener thinking. It would cut emissions without overspending national wealth on grandiose central planning or command-and-control regulation. And it would raise revenue, which lawmakers could use for debt reduction, lowering other taxes, improving the social safety net or some combination. The carbon tax is one of the best ideas in Washington almost no one in Congress will talk about.

Conservative icons George Schultz and Gary Becker on why they support a Carbon Tax

Nobel-winning economist Gary Becker and Reagan-Nixon cabinet secretary George Shultz proposed to replace costly clean energy subsidies  with a far more effective revenue-neutral carbon tax. (Wall St. Journal, April 7, 2013):

[W]e should seek out the many forms of subsidy that run through the entire energy enterprise and eliminate them. In their place we propose a measure that could go a long way toward leveling the playing field: a revenue-neutral tax on carbon, a major pollutant. A carbon tax would encourage producers and consumers to shift toward energy sources that emit less carbon—such as toward gas-fired power plants and away from coal-fired plants—and generate greater demand for electric and flex-fuel cars and lesser demand for conventional gasoline-powered cars.

We argue for revenue neutrality on the grounds that this tax should be exclusively for the purpose of leveling the playing field, not for financing some other government programs or for expanding the government sector. And revenue neutrality means that it will not have fiscal drag on economic growth.

The Market and Mother Nature

Economist and columnist Thomas Friedman urged climate hawks and deficit hawks to find common cause in support of a deficit-reducing carbon tax. (New York Times, January 8, 2013):

I am struck by how many liberals insist on reducing carbon emissions immediately, but, on the deficit, say there is no urgency because no interest rates rises are in sight. And I am struck by how many conservatives insist we must reduce the deficit immediately, but, on climate, say there is no urgency because, so far, temperature rise has been slight…  A carbon tax would reinforce and make both strategies easier.

In Defense of a Carbon Tax

Responding to Dave Roberts’ lament that a carbon tax can’t tackle the climate menace, the Carbon Tax Center’s James Handley and Charles Komanoff articulated the importance of an aggressively-rising tax on carbon pollution to meet the challenge. (Grist, Dec. 4, 2012; also presented as a side-by-side rebuttal of Roberts’ 10 points on CTC’s blog):

Assuming 3 percent annual inflation, a [carbon] tax rising 4 percent a year faster than inflation would take a decade to double in nominal terms, and almost two decades to double in real terms. That’s way too slow a ramp-up, considering that a carbon price of $40/ton of CO2 would add a mere 36 cents to a gallon of gasoline and 1.5 cents/kWh to the average U.S. retail electricity price.

We need a carbon tax that quickly gets to much higher rates than that. It doesn’t have to start like gangbusters; indeed, it shouldn’t, since families, businesses, and institutions all need (and deserve) time to adapt to the new reality of higher fuel and energy prices. A steady and steep ramp-up rate is far more important and beneficial than a high starting point.

These considerations make the ideal carbon tax close to that embodied in legislation introduced in 2009 by Rep. John Larson (D-Conn.). Larson’s carbon tax starts at $15/ton and rises each year by $10-$15, with the actual increment depending on whether emissions are being driven down fast enough. In the 10th year of a carbon tax, the CO2 price would be between $100 and $145 per ton of CO2 under the Larson bill…  the market pull (including long-term price expectations) should suffice to elicit cleantech innovation and revolution.

An Emissions Plan Conservatives Could Warm To

Former Representative Bob Inglis and former economic adviser to President Reagan, Arthur Laffer framed the conservative values supporting a carbon tax (New York Times, December 27, 2008):

We need to impose a tax on the thing we want less of (carbon dioxide) and reduce taxes on the things we want more of (income and jobs). A carbon tax would attach the national security and environmental costs to carbon-based fuels like oil, causing the market to recognize the price of these negative externalities.

The market-driven innovation that brought us the Internet and the personal computer could quickly bring us new, cleaner fuels. A carbon tax that was fully offset (with payroll or income taxes cut by a dollar amount equal to the revenues generated by the new tax) would be as bold as the threat that we face.

Conservatives do not have to agree that humans are causing climate change to recognize a sensible energy solution. All we need to assume is that burning less fossil fuels would be a good thing. Based on the current scientific consensus and the potential environmental benefits, it’s prudent to do what we can to reduce global carbon emissions. When you add the national security concerns, reducing our reliance on fossil fuels becomes a no-brainer.

Presentations, Videos, etc

From the Price Carbon Campaign – Carbon Tax Center “Pricing Carbon Conference” at Wesleyan Univ., Nov. 2010

Books

Implementing a U.S. Carbon Tax — Challenges and Debates, Ian Parry, Adele Morris, Roberton C. Williams III,  (IMF, Routledge Explorations in Environmental Economics, 2015)

The Case for a Carbon Tax, Shi-Ling Hsu (law professor & economist), 2011.  Reviewed here.

Fuel Taxes and the Poor  (The Distributional Effects of Gasoline Taxation and Their Implications for Climate Policy), Thomas Sterner, (economist, editor), 2012

Global Carbon Pricing: We Will If You Will (2015). E-book compiling eight papers by David J. C. MacKay, Richard Cooper, Joseph Stiglitz, William Nordhaus, Martin L. Weitzman, Christian Gollier & Jean Tirole, Stéphane Dion & Éloi Laurent, Peter Cramton, Axel Ockenfels & Steven Stoft. The authors, from a variety of viewpoints and disciplines, conclude that negotiating an explicit global price on carbon pollution would unlock global climate negotiations by aligning national self-interest with the global goal of rapidly reducing greenhouse gas emissions.

Fiscal Policy to Mitigate Climate Change, Ian Parry, Ruud de Mootj, Michale Keen (economists, editors, IMF, 2012)

Plan B 4.0 (A realistic path to a sustainable future), Lester Brown, 2009

The Reality of Carbon Taxes in the 21st Century, Janet Milne (law professor), 2008

Storms of My Grandchildren, James Hansen (climate scientist), 2010