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Goodbye to the Climate Solutions Caucus?

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Did any group of incumbent politicians fare as badly in yesterday’s midterms as the Republican members of the Climate Solutions Caucus? That seems unlikely, given the staggering dimensions of the electoral debacle inflicted on them (all figures apply only to the Congressional group’s Republican members):

  • 15 members lost their re-election bids (includes cliffhanger defeats of GOP incumbents Mia Love (UT-04) and Tom MacArthur (NJ-3)).
  • That’s out of 35 members who were seeking re-election (another 7 stood down, 1 lost his GOP primary, and we exclude 2 members from U.S. territories).
  • The loss rate for caucus members — 43 percent — wildly exceeds the roughly 10-15 percent loss rate for Republican House incumbents overall.*
  • Caucus members accounted for around half of GOP incumbents’ House losses. (That total, still hard to pin down, appears to be around thirty.)
  • With the 15 losses and 8 retirements, the 43-member Republican half of the caucus will dwindle in January to well under half, 20.

[* = Calculating the overall GOP incumbent loss rate isn’t simple, since it requires separating Republicans who stood down from those who ran and lost on Nov 6. District-specific results posted by the Cook Political Report by David Wasserman and Ally Flinn may help. Ditto, Ballotpedia.]

One of the defeated Congressmembers was caucus co-founder and spearhead Carlos Curbelo (FL-26), who was edged out by Democrat Debbie Mucarsel-Powell, a political newcomer.

Meanwhile, “No Democratic members of the climate caucus lost their reelection bids,” ThinkProgress reported, “although two Democratic members are retiring and one is running for a higher office.”

It is true that Republican caucus members on the whole were more vulnerable than other Republican incumbents, for two separate if complementary reasons. One, deep-red districts where climate concern is relatively low tend to be harder for Democrats to wrest from Republicans. Two, some Republicans whose electoral standing was shaky to begin with saw the caucus as a way to bolster their campaigns. For an effective price of zero, these members could signal their independence from Republican denialism and thus burnish their appeal to Democrats and so-called Independents.

These points aren’t new to readers of this blog. We first conveyed our skepticism of caucus sincerity in June, with a post, Another Carbon-Dividend Group. Will It Matter?, and followed that a month later with Last Chance to Believe In a Republican-Assisted Carbon Tax? As the midterms approached and GOP incumbents lashed themselves ever tighter to the White House denialist-in-chief, we let loose with the more cynical, “Climate Caucus” greenwashing in full force as midterms approach, in September.

In between, we gave caucus co-founder Curbelo his props with Unicorn or Harbinger? A Republican Carbon Tax Is Readied for Debut. We concluded by remarking that with Curbelo’s introduction in July of a carbon tax bill, a GOP first:

A “long national nightmare” of Republican silence and inaction on climate may be starting to end. Whether other G.O.P. lawmakers will stand with Curbelo remains to be seen. He is at least blazing a path, and for that he deserves our thanks.

Alas, Curbelo’s path was never more than a faint trail. The current Republican Party — which a year-and-a-half ago we labeled “a racket to restore patriarchy, extractionism and white supremacy” — wasn’t about to forsake Trump and the Koch Brothers and coal barons for a “unicorn” Republican Congressmember.

Whither the Climate Solutions Caucus, leaderless and downsized by half? (The disappearance of 22 caucus R’s means that 22 D’s will have to leave as well, to conform to its “Noah’s Ark” makeup whereby each Democrat requires a Republican counterpart, lest the caucus’s vaunted “bipartisan” brand be diluted.)

We expect the caucus will disappear. Not just because its membership is being cut in half but because its uselessness has been fully laid bare. In today’s tribal politics, national-level Republicans can’t evince climate concern except as a token gesture, if that. They certainly can’t act on it by, say, renouncing Trump’s renunciation of the Paris climate agreement, or calling for a national carbon tax or fee. Heresy of that sort guarantees being cast out of the party’s belly and into the political wilderness.

Shed a tear, then, for Carlos Curbelo, but only briefly. The Democratic takeover of the House is worth an eternity of Republican caucus members’ feints, signalings or even token bills. As CNN’s John Harwood tweeted today, the House vote “was an all-or-nothing binary — power or no power. [The] Dem[ocrat]s won power.”

One result: There will be fact-finding congressional hearings, on issues from Russia to climate. If we push hard enough, these will include examination of carbon taxing. Climate activists everywhere — in the U.S. and around the world — will be heartened and emboldened to demand and win real climate action, not lip service.

May 2020 addendum: Click here for Citizens Climate Lobby’s current list of Climate Solutions Caucus members. The same list but with photos is available on the Web site of CSC Democratic member Rep. Ted Deutch.

IPCC: Not just a carbon price, but a really high one

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We’re finally catching up with last week’s two big climate-policy stories: the new IPCC report on the dire consequences if global temperatures rise more than 1.5°C above pre-industrial levels, and the awarding of the Nobel Prize in economic science to climate-policy pioneer William Nordhaus of Yale.

Nobel Laureate Nordhaus, in New Haven last week. Photo by Monica Jorge, courtesy NY Times.

A clear thread links the two stories: earth’s climate — and literally human society — faces repeated, widespread, unmanageable disruption unless the world’s nations and peoples begin a sharp and complete U-turn from fossil fuels to carbon-free energy; and this requires not just a “price on carbon” but a high one, as the New York Times spelled out in the headline of perhaps the paper’s key story last week.

Not only that, the price must be considerably higher than Prof. Nordhaus, the dean of climate-damage modeling, has called for throughout his illustrious careeer.

The story, by Times climate-economics reporter Brad Plumer, warrants quoting at length:

More than 40 governments around the world, including the European Union and California, have now put a price on carbon, either through direct taxes on fossil fuels or through cap-and-trade programs. But many of them have found it politically difficult to set a price high enough to spur truly deep reductions in carbon emissions.

The concept of carbon pricing received another implicit endorsement on Monday from the Nobel Prize committee, which awarded Yale’s William D. Nordhaus a share of the 2018 Nobel Memorial Prize in Economic Science for, among other things, making a case that “the most efficient remedy for the problems caused by greenhouse gas emissions would be a global scheme of carbon taxes that are uniformly imposed on all countries.” (emphasis added)

Plumer noted that since the 1970s, Prof. Nordhaus has “argued that companies that burn fossil fuels should be taxed at a rate that reflected the harms they were imposing on the rest of the world.” Needless to say, the companies would pass on most if not all of these carbon taxes in the form of higher prices for fossil-fuel derived electricity, gasoline and diesel fuel prices, etc. — a feature rather than a bug since these price incentives would do more than any other competing policy measures to motivate the companies themselves, along with millions of other decision-makers to change behavior, make investments and pursue innovations to minimize their tax exposure and, thus, shrink national and global use of fossil fuels and resultant carbon emitting.

“Economists have long been enthusiastic about carbon pricing because of the policy’s efficiency,” Plumer wrote in The Times. “Give companies a financial incentive to reduce their fossil-fuel use, and they will find creative and cost-effective ways to do so without the need for heavy-handed government regulations.”

That’s essentially our view at the Carbon Tax Center, except that we don’t necessarily view direct regulations like car-mileage standards as heavy-handed — just less productive than advertised, due to their scattershot, reactive nature; overrated, you might say.

How steep must a carbon tax (or carbon price “delivered” under a cap-and-trade permit system) be to enable the climate catastrophe of 1.5°C or greater temperature rises? As Plumer notes, the IPCC report estimated that the global-average price to emit a ton of CO2 pollution must be at least $135 by 2030, and perhaps as great as — are you ready? — $5,500.

The bottom end of the range, at least, is right in line with what CTC has been advocating since roughly 2010, with a carbon tax starting at $12.50 per ton of CO2 and rising by $10/ton each year. As we never fail to point out, within a decade the tax, passing $100/ton and still rising, would cut U.S. emissions by roughly one-third from today’s levels. While stronger medicine is almost certainly needed, we’ve tended to stick to that trajectory to stay within the lines of political feasibility — a convention we would gladly bend if the carbon tax, once implemented, proved more acceptable to the public and elected officials.

Plumer’s wonderfully informative article hints at that possibility:

Policies that are widely popular with voters, such as mandates for renewable energy, can help reshape the political landscape to make more ambitious climate action feasible. And policies that spur innovation and drive down the cost of cleaner alternatives to fossil fuels, such as electric vehicles, could potentially make higher carbon prices more palatable.

In other words, as the perceptive Vox journalist David Roberts pointed out several years ago, continued advances in (and broadening uptake of) wind power, solar PV, electric cars, etc. could help carbon taxes be seen as a helpful bridge rather than a punishing hand. And, politically, that could make all the difference.

As for Nobel laureate Nordhaus, we haven’t been alone in criticizing him over the years for settling on an adamantly conservative formulation of carbon damages and the resulting “social cost of carbon” — one that arises from both his insistence on a high “discount rate” that shrinks future costs in present terms, and his exclusion from his modeling of the prospect that climate change will erode societies’ ability to generate new wealth by inhibiting the accumulation of technological and intellectual capital, among other losses.

Today, however, we applaud Prof. Nordhaus’s Nobel and share the hope he expressed in an interview this past weekend with The Times’ Coral Davenport, that “if we continue to work on this, the public will get there on the science, and make an exception to the toxicity of taxes.”

“It will help if [the carbon tax is] tied to something popular — if, as a result of the revenue from a carbon tax, you get a check in the mail, or it funds health care,” Prof. Nordhaus added in his interview. We’re all still searching for the right political formula. “I’m hopeful that grown-ups will take over and we will do what is necessary,” he said. “If we don’t, then things will just get worse and worse.”

CTC policy associate Bob Narus contributed information and ideas to this post.

A middling carbon tax could recoup Trump’s gutting of mpg standards … and then some

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Before you take umbrage at the headline, let me be clear: President Trump’s announcement yesterday proposing to freeze federal car-mileage standards at 2020 levels and revoke California’s longstanding authority to set auto emissions standards tighter than federal standards is contemptible.

The mpg freeze will mean more carbon emissions hastening the plunge into climate chaos not only for Americans but for the seven billion other people with whom we share the planet. The California revocation will bring down the curtain on that state’s half-a-century of innovation in low-emissions regulation and technology.

Both moves are archetypal Trumpian policy-by-pique. Their sole purpose is to stick mud in the eyes of Gov. Jerry Brown, who with his father, Gov. Pat Brown, pioneered green state governance; of President Obama, for whom ramping up auto mpg requirements was a cornerstone measure to combat global warming; and of untold numbers of Americans who care deeply for our environment.

The policy, a gift to oil companies, will accomplish nothing while sowing vast damage. Like Trump himself, it is spiteful, sickening and stupid.

Emission trajectories shown reflect carbon tax that would diminish CO2 from autos as much as Trump’s mpg freeze will raise them. Economy-wide decreases in analysis-year 2035 are eight times as great as auto impacts alone.

But what’s also true is that a mid-range carbon tax could recoup the lost ground. I calculate that a U.S. carbon tax that started next year at a level of $5 per ton of carbon dioxide and increased by $5 a ton each year, with no letup, would, by 2035, be curbing carbon emissions from gasoline use by the same amount that Trump’s cessation of tighter mpg standards will increase them — around 140 million metric tons of CO2 a year.

Moreover, such an economy-wide carbon tax would bring about parallel drops in emissions throughout the economy — in electricity generation, freight-hauling, aviation and industry. I estimate that in 2035, when the hypothetical carbon tax would have reached $85 per ton, those reductions would amount to an additional 980 million metric tons. All told, the carbon tax would suppress carbon dioxide emissions eight times as much as Trump’s mileage freeze will elevate them.

To reflect the hypothetical nature of the carbon tax I express its benefits in the subjunctive (“would”) while employing the definite tense (“will”) for Trump’s intended rollbacks. This is a necessary concession to the arduous and uncertain task of passing a U.S. carbon tax, in contrast to the president’s all-too-real administrative powers — notwithstanding the fierce legal and political challenges that will be mounted against those moves. The point is not to trivialize the White House’s latest destructive act but to highlight the vast potential of a robust carbon tax to cut emissions.

A carbon tax covering gasoline would stand in for higher mpg standards, in part, by nudging consumers to more fuel-efficient vehicles and, thus, incentivizing manufacturers to design and market them. More than that, the higher fuel price could inflect drivers’ day-to-day decisions on how far to travel and, for multi-car families, which car to take, not to mention how aggressively to drive. Vehicle miles traveled (VMT) would shrink somewhat as well, as decision-needles tilt toward car-sharing, trip-chaining, public transit, and walking and biking.

This isn’t to overstate the link between higher fuel prices and lower gasoline use. In our modeling at the Carbon Tax Center we employ a “long-run” gasoline price-elasticity of just 0.35 (discussed and derived here), by which prices at the pump must rise by a third to cut usage by a tenth. It also bears repeating that not all Americans have agency to respond to price rises. But while a binary frame may be useful for viewing individuals’ fuel-use decisions, the aggregate level of fuel use (and the resulting carbon emissions) is the product of literally billions of daily and longer-term decisions.

Moreover, autos (cars and light trucks) make up just one-quarter of U.S. carbon emissions — even when “upstream” oil refining is factored in. The sectors yielding the other three-quarters of U.S. CO2 — electricity, freight, air travel, industry, heating, construction — are more price-elastic, which is why a carbon tax that would recoup the reductions from the higher mpg standards would yield another 7-fold’s worth of reductions.

So yes, Bill McKibben is spot-on to call the mileage freeze Trump’s “stupidest decision yet in his endless attempt to roll back environmental protections.” And yes, a carbon tax of any stripe, let alone one that could rise to $85 per ton by 2035 as in our modeling exercise here, remains nowhere in sight so long as Republican extractionism and malice rule Congress and the White House.

But that’s not cause to ignore or abandon the long-term campaign for a robust U.S. carbon tax. Quite the opposite.

Our Numbers Explained: We used the Rhodium Group’s May 2018 analysis, Sizing Up a Potential Fuel Economy Standards Freeze. For 2035, Rhodium projected a 114 million metric ton fallback in CO2 reductions if oil prices are low, and 32 million tons if prices are high. (The high-price fallback projection is smaller because expensive gasoline would do some of the work of mpg standards in engendering fuel efficiency while also dampening the amount of driving.) We conservatively used the higher figure and added 20 to 25 percent to capture upstream (refinery) emissions, yielding a target of 140 million metric tons. Through trial-and-error, we found that CTC’s carbon-tax model (downloadable as an Excel spreadsheeet) also projects a 140 million metric ton reduction from gasoline use, with a hypothetical carbon tax that would start next year at $5/ton and rise by $5/ton annually, in constant-2017 dollars. The economy-wide (all sectors) reduction is 1,122 million metric tons.

The Carbon Tax Center Last Year . . . and in 2018

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Everyone’s 2017 was eventful . . . and disruptive . . . and difficult.

From January into April, we, like many of you, marched and protested while trying to see a way forward for carbon taxes under a denialist U.S. regime.

We didn’t write this headline, but we agreed with it. The Left’s opposition to the WA carbon tax was a grievous mistake.

We spoke at gatherings across New York City. We published an article in The Nation magazine decrying left-green dogmatism that doomed the campaign in Washington state to enact the USA’s first carbon tax. We allied ourselves with the Climate Leadership Council’s audacious Republican-branded carbon tax proposal. We published a 120-page guide to state carbon tax prospects compiled by Yoram Bauman, the economist-activist who spearheaded the Washington referendum.

By then we were 100 days into a new administration whose cruelty and heedlessness were sickening. At a climate march in New Jersey, we called the complicit U.S. Republican Party “a racket to restore patriarchy, extractionism and white supremacy.” This truth grew even sharper a month later when Congressional Republicans cheered Trump’s repudiation of the Paris Climate Agreement.

Outputs from CTC’s carbon-tax model: download and use!

We kept working. We retooled CTC’s carbon tax spreadsheet model, incorporating the latest data, snazzing up the user interface and graphics, and for the first time apportioning refinery emissions among their “downstream” sectors — driving, freight and air travel (jet fuel). With this change and the ongoing shrinkage in coal-fired power generation, driving is gaining on electricity for the dubious distinction of most climate-damaging U.S. sector.

Meanwhile, a campaign for congestion pricing in New York City — fees charged to vehicles driven into and within gridlocked city centers — was gathering steam amid meltdowns in the city’s mass transit system, worsening traffic gridlock, and a void of political leadership. When Gotham’s SUV- and helicopter-riding mayor crowned himself leader of state-and-local-government resistance to the White House, we upbraided him on live radio, setting off a media frenzy that continues today.

Our radio call-in touched off a roiling debate about the gap between public postures and personal acts.

But our criticism went beyond tabloid fodder; it pointed to the persistent gap between public postures and personal acts — a breach that carbon taxes could help repair.

Our pivot from national carbon tax campaigning accelerated in August, after Gov. Andrew Cuomo unexpectedly announced his support for congestion pricing. Shortly after, the analytics team advising the governor reached out to me: Would I help them deploy my monster congestion pricing model to score different congestion pricing plans?

Of course I said yes and plunged into massive updating and retooling of the model, which continues as I write this post. Details of the governor’s proposal are expected in a few days and the public debate and legislative donnybrook will almost certainly extend for several months. The fight is important, not just for the sustainability of New York and other global cities, as I argued last week on Streetsblog, but to finally establish in the USA the principle at the heart of carbon taxing: that the most surefire and equitable way to reduce pollution is to make polluters pay for it. [Addendum: The details can be found in my January Streetsblog post, The Fix NYC Congestion Pricing Plan Looks Solid — If Cuomo Aims High, which includes a link to the governor’s panel’s report.]

CTC’s program for 2018

At the national level, the main event by far for carbon taxing this year is to bring an end to Republican climate denialism. This could mean routing the GOP in the midterms, or some other path to repudiating the party’s nearly monolithic rejection of science-based climate policy and its all-out embrace of fossil fuels. It may also require, in the states, dismantling the gerrymandering that, combined with Democrats’ “clustering” in urban precincts, entrenches Republicans’ control of Congress far beyond their share of Americans’ votes.

I’m sorry to say that the notion of a bipartisan federal carbon tax is barely on life-support, as we wrote here last week, decrying the passivity of the Climate Solutions Caucus — the Noah’s Ark-like conclave that we formerly touted as a possible incubator for a revenue-neutral carbon tax. Nevertheless, CTC will continue our technical support and policy advice to members of Citizens Climate Lobby and to the Climate Leadership Council. But we harbor no illusions that current Republican officeholders will provide political leadership or even partnership for meaningful carbon pricing legislation.

Excerpt from “Results” section of our “BTA” spreadsheet model. A key goal for early 2018: A congestion pricing win for NYC that establishes the “polluter pays” principle in the USA.

There’s a corollary: it may be time to rethink revenue-neutral carbon taxes. As much as we love carbon fee-and-dividend, with its powerful logic of linking rising carbon taxes to rising “green checks,” the revulsion against Trump and the G.O.P. could make it harder to sell progressives on programs with a seemingly middle-of-the-road cast. We also can’t dismiss arguments by Frank Ackerman and others that the “fat tail” of climate worst-cases demands national mobilization on a scale that only government action can generate.

Along with political action and some soul-searching, CTC is primed this year to

  • Monitor and parse actual carbon emission reductions in states, sectors and countries with carbon pricing, including the 9 RGGI states;
  • Assess and fact-check claims of economies decarbonizing without carbon pricing;
  • Expand our networking with state and national carbon tax advocates in the U.S. and overseas;
  • Seek common ground on carbon taxing with environmental and climate justice advocates;
  • Explore alliances with progressives working to meld carbon pricing with “mobilization” strategies;
  • Seek out Republicans-conservatives who have genuine interest in non-token carbon taxes;
  • Gain a better understanding of the possibilities and limits in fossil fuel divestment and litigation campaigns;
  • Continue improving and disseminating our carbon tax spreadsheet model;
  • Restock CTC’s Web site;
  • Keep writing op-eds and magazine pieces promoting carbon taxes;
  • Use our blog to post commentary on unfolding political developments, policy proposals and energy trends.

As we head into the new year, we thank you for your past support and your partnership. Contributions to support our work in 2108 (please use this link) will, as always, play a valuable role in keeping CTC edgy, timely and forward-focused.

Bob Corker and the Climate Swerve

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The trope shown at left, about Trump “holding the planet hostage,” isn’t entirely new. But it came into sharper relief for me over the weekend as I read Robert Jay Lifton’s insightful new book, The Climate Swerve. And it gave added weight to the apostasy of a ranking Republican senator who earlier this month told the New York Times that Trump’s bluster toward North Korea may be setting the United States “on the path to World War III.”

The senator issuing the warning was Bob Corker (R-TN), chairman of the Senate Foreign Relations Committee. His words capped a 10-day raging argument in which Trump ridiculed Corker’s decision not to seek a third term next year, and Corker tweeted that “the White House has become an adult day care center” struggling to keep its main occupant in check. “He concerns me,” the senator said of the president. “He would have to concern anyone who cares about our nation.”

Corker’s blunt talk about Trump brought to mind his independent stance on climate in the months following the 2008 election of Barack Obama. The defeated GOP candidate, Senator John McCain, had been a backer of carbon cap-and-trade, as were many Congressional Democrats and nearly all of the major environmental organizations. Corker took a minority view, speaking out in favor of carbon taxing in a January 2009 hearing before the Foreign Relations Committee:

I wish we would just talk about a carbon tax, 100 percent of which would be returned to the American people. So there’s no net dollars that would come out of the American people’s pockets.

Not everyone back then viewed Corker as a straight shooter. Grist blogger David Roberts lambasted him for “talk[ing] his way inside the carbon policy tent and now … trying to burn it down” by diverting support from cap-and-trade. But the New Republic’s Brad Plumer insisted that “Bob Corker [is] making sense … for a fruitful conservative position” that’s revenue-neutral and transparent. (Roberts now blogs for Vox while Plumer writes for The New York Times.) Indeed, it’s not much of a stretch to credit Corker’s 2009 words as the launch pad for the Citizens’ Climate Lobby’s fee-and-dividend idea and its recent offshoot, the Climate Leadership Council’s carbon dividends approach.

Unfortunately, carbon taxing didn’t advance beyond the fringe in either political party, and climate rejection soon became an element of Republican tribal identity, leading Corker to give up on carbon taxes and on climate generally. And for more than a decade few public figures had much to say about nuclear weapons and the specter of nuclear war. That began to change this year with the launch of nuclear-capable missiles by North Korea and Trump’s vow that if “North Korea … make[s] any more threats to the United States, they will be met with fire and fury like the world has never seen.”

Trump has also repudiated the Paris climate agreement and taken steps to annul the Obama Clean Power Plan and to greenlight fossil fuel development across North America. Humankind now is staring at not one but two “apocalyptic twins,” in Lifton’s words: a nuclear threat and a climate threat. Both the parallels and differences between the two are the subject of Lifton’s new book, Climate Swerve, which appears in the immediate wake of climate furies that have devastated Houston, Puerto Rico and Northern California.

Lifton, a psychiatrist who turned 90 last year, has long observed, lived among and written about the perpetrators and victims of some of the 20th Century’s most profound atrocities — the atomic bombings of Japan, the Vietnam War and, of course, the Nazi Holocaust. His writing humanizing the hibakusha (literally, “explosion-affected people”) of Hiroshima and Nagasaki and his explorations of the “malignant normality” embodied in the Cold War policy of “mutually assured destruction” galvanized public and political support for both the Kennedy-Khrushchev 1963 ban on atmospheric nuclear weapons testing and the Reagan-Gorbachev 1987 agreement eliminating short- and intermediate-range nuclear missiles.

It was only recently, however, that Lifton turned his attention to climate change. His brand-new book, eloquent and spare, has two tracks. In one he encourages what he calls the climate swerve — humanity’s “evolving awareness of our predicament” as we collectively cause, and face, climate ruin. In the other he seeks to bring to climate consciousness his perspective on what was, at least until this year, mankind’s turn from the brink of nuclear ruin.

This passage (slightly edited for readability, emphasis added in bold) is emblematic:

Nuclear and climate threats are separate and different from each other. With nuclear weapons, the mind must contemplate specific things — bombs that bring about revolutionary dimensions of blast, heat, and radiation. The imagined catastrophe is immediate and decisive, and the atomic bombing of Hiroshima and Nagasaki provides a model of unprecedented slaughter and suffering. With climate threat, the mind encounters no new physical entities or things, but rather an incremental sequence of an increasingly inhospitable habitat, a progression rather than an explosion, and a series of projections of what can be expected, as opposed to a clear display of ultimate destruction.

Nevertheless, an irony — and a strangely hopeful one — of Lifton’s book is that Hurricanes Harvey and Irma have produced, for all who care to see, painfully “clear displays of ultimate destruction.” Lush Puerto Rican farmlands and woodlands flattened and laid barren are now literally concrete, as are obliterated California vineyards. Lifton himself put these facts front and center in an op-ed for The New York Times earlier this month (emphasis added):

Climate images have never been able to convey our full planetary danger until now. The extraordinary recent four-punch sequence of hurricanes … threatened the lives of millions of people, obliterated their homes and has raised doubts that some places will ever recover … The hurricanes … provided imagery equivalent to the danger, imagery equivalent to nuclear disaster. When we viewed photographs and film of the annihilated cities of Hiroshima and Nagasaki, we sensed that the world could be ended by nuclear weapons. Now these hurricanes have conveyed a similar feeling of world-ending, having left whole islands, once alive in their beauty and commerce, in ruin.

I imagine I’m not the only one brought to tears but also galvanized by those words. They appeared in print on the same Sunday morning, October 8, that Bob Corker called the New York Times to warn about Trump putting us “on the path to World War III.”

While there may not be a direct line from Lifton’s op-ed to Corker’s speaking out, both of their testimonies are proof that we’re not hostages. We still have voices, and both the advance of climate ruin and the renewed chances of nuclear ruin require that we raise them. Republican voices like Corker’s are especially critical, but anyone with power and a pulpit shouldn’t hesitate to use them. And for the rest of us, a letter to our local paper, a Facebook post, or plain old face-to-face sharing can help others grasp the gravity of the risks we are living with and how we can overcome them.

Baker-Shultz carbon tax would let U.S. keep its Paris pledge

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As the U.S. president holds the world hostage to his impending decision to accept or repudiate the Paris Climate Agreement, it’s worth noting that the United States could meet its Paris emissions pledge by adopting a Republican-branded carbon tax proposal.

That’s the so-called Baker-Shultz carbon tax devised by the Climate Leadership Council and released in February by a team of Republican luminaries headed by Reagan Secretary of State George Shultz and George H.W. Bush Secretary of State James Baker. The CLC proposal, dubbed “The Conservative Case for Carbon Dividends,” would tax U.S. CO2 emissions from fossil-fuel combustion at $40 per ton and return the revenues in equal shares to American families (thus the “dividends” in the proposal’s name).

The vertical distance from actual 2005 emissions (5,812) and projected 2025 emissions with the green triangle (4,242) is 1,570, which is 27% of the 2005 amount (all figures in million metric tons of CO2).

As the Associated Press reminded us at the onset of the holiday weekend, “nearly 200 countries are part of the Paris accord and each set their own emissions targets, which are not legally binding. The U.S. pledged to reduce its annual greenhouse gas emissions in 2025 by 26 to 28 percent below 2005 levels, which would be a reduction of about 1.6 billion tons of annual emissions.”

With informed sources such as Inside Climate News and the New Republic insisting that Trump’s rescission of Pres. Obama’s Clean Power Plan puts our Paris target out of reach, we decided to run our carbon-tax spreadsheet model on the CLC proposal. The result was a bullseye: the model calculates that implementing an economy-wide charge of $40/ton of CO2 on U.S. coal, oil and gas combustion in 2018 would, by 2025, result in total CO2 emissions of 4,242 billion metric tons — a figure 27% less than 2005 baseline emissions of 5,812 billion metric tons. That’s smack in the center of our country’s pledge to reduce emissions by 26% to 28%.

Our numerical finding closely matches CLC’s own estimate of a 28 percent drop in emissions in 2025 vs. 2005 from the $40/ton CO2 charge. And while a majority of the forecasted reduction in emissions from today to 2025 would be in the electricity sector, the expected 45 percent share of reductions in the other sectors (passenger auto and air travel, freight movement, oil refining, etc.) is a big increase from those sectors’ 27 percent share of reductions from 2005 to 2015, reflecting the carbon tax’s power to reduce fossil fuels use more broadly than targeted regulations.

A few important details:

One, CLC’s modeling assumes a 2% per year real increase in the carbon tax following the initial startup at $40/ton. We’ve conservatively assumed zero increase, although our graph also shows a steeper reduction predicated on raising the initial charge by $5 per ton per year.

Two, our two curves coincide for the first few years and begin diverging only in 2021. That’s because we’ve built a “brake” into our model that limits the economy’s uptake of the carbon charge to a rate of $12.50 per ton per year; increases beyond that are carried over into future years. Thus, the full impact of the $40 initial charge imposed in 2018 isn’t felt until 2021.

You can input your own carbon tax rates into our model. This screen is on the spreadsheet’s Summary page.

Three,  the U.S. Paris commitment of a 26-28 percent reduction applies to all greenhouse gases, not just CO2. But since non-CO2 GHG’s such as methane are considered to have more low-hanging fruit, on average, being able to achieve a 27% reduction in CO2 by 2025 should virtually guarantee hitting the target of 27% less greenhouse gases.

Note that we label the Baker-Shultz proposal “Republican-branded” rather than “Republican,” preferring to reserve the latter designation for current Republican office-holders. But it’s striking nevertheless that a carbon tax proposal advanced by erstwhile Republican icons — Messrs. Baker and Shultz held many other senior positions even beyond secretary of state — could enable the present Republican administration to meet our country’s Paris climate-protection targets, and to do so in a straightforward, non-regulatory, “market-friendly” fashion that was once considered a bedrock G.O.P. principle.

We’re updating our carbon-tax model to the latest (2016) baseline. Watch this space for its release in June.

 

 

 

 

 

 

Don’t Link Carbon Markets

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

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

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

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

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

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

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

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

Lessons From Acid Rain

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

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

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

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

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

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

Mixed Messages

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

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

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

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

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

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

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

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

A Higher Price

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

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

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

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

Why China’s Emissions Triumph Surpasses the United States’

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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