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Don’t Fear Exxon’s Endorsement of the Baker-Shultz Carbon Tax

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Here we cross-post my article published in The Washington Spectator magazine yesterday, under the headline, A Carbon Tax With Legs. Except for a handful of line edits below, the two versions are the same.

For years, carbon tax advocates scoffed at the notion that Exxon-Mobil would back a tax on climate-damaging carbon pollution. We saw through the vague hypotheticals in which the oil giant cloaked its occasional expressions of support. Rather than invest political muscle in carbon tax legislation, Exxon for decades funded a network of deception that blocked meaningful action on climate.

So why are we taking notice that this past June Exxon formally endorsed a so-called Republican carbon tax plan? And why am I not up in arms that the plan entails granting Exxon and other fossil fuel owners immunity from legal damages for the climate havoc caused by extracting and burning these fuels?

It comes down to two reasons. First, there’s little chance that oil, coal, and gas companies could ever be made to pay more than token amounts for the ruin their products cause. Second, though bankrupting big oil may seem appetizing, it’s a distraction from the real goal of “demand destruction” — shrinking and eliminating the use of carbon-based fuels. The fastest path to that goal is through a robust carbon tax that manifests the harms caused by those fuels in the prices the marketplace sets for oil, coal, and gas, as the new proposal would do.

The carbon tax plan is dubbed “Republican” because its public faces are those of George Shultz and James Baker, exemplars of the outcast center-right GOP establishment. Two factors set this plan apart from current Republican orthodoxy.

First, the Shultz-Baker tax is no slouch. It would start at $40 per ton of carbon dioxide and rise from there, putting it miles above anything floated by oil companies or Republican officeholders. The price is high enough not only to nail the coffin on coal, by far the dirtiest fossil fuel, but also to put a serious dent in oil usage.

After a decade, according to my modeling, U.S. carbon emissions would be 27 percent less than last year and 36 percent less than in 2005, the standard baseline year in climate analysis.

Second is the equitable distribution of the carbon tax proceeds. They would be disbursed to American families as “dividends,” with equal revenue slices for all. This approach is not only income-progressive, making it a black swan among Republican policy ideas; it also buys support for raising the tax level over time, since the dividends would rise in tandem.

The Shultz-Baker tax may actually have political legs. While the current White House and Congress are tribally bound to vilify anything smacking of Al Gore or Barack Obama, the 2018 midterms and the 2020 presidential election could bring a reckoning on climate policy. With a majority of Americans in a recent poll calling climate change “extremely or very important” to them personally, Republicans may soon be seeking an escape hatch.

Three attributes in the Shultz-Baker proposal meant to win over the center-right are anathema to progressive elements in the climate movement. We can call them: no investment, no regulation, and no litigation.

“No investment” means dedicating the carbon revenues to the dividend checks, leaving none for government to construct carbon-free energy and transportation systems or to remediate the “frontline” communities most ravaged by fossil fuel infrastructure. Yet economists are convinced that the price-pull of the carbon tax will bring about this transition.

“No regulation” means rescinding EPA climate rules, principally the Obama-era Clean Power Plan prized by environmental powerhouses like the Sierra Club. But the Clean Power Plan is nearly “mission accomplished”: its target is already four-fifths met (and rising) as coal-fired electricity production is eaten away by natural gas, rising wind and solar power, and energy efficiency.

Finally, “no litigation” means letting carbon corporations and shareholders off the hook for producing and promoting their climate-ruining products — a bitter pill for the broad and insistent fossil fuel divestment and “Exxon knew” movement spearheaded so effectively by Bill McKibben. Yet would that be a grievous loss? Not according to Michael B. Gerrard, who directs the Sabin Center for Climate Change Law at Columbia Law School: “No lawsuits anywhere in the world seeking to hold fossil fuel companies liable for climate change have succeeded,” Gerrard told me recently via email. “Losing the ability to sue these companies for climate change would not be giving up a huge amount if it were in exchange for a large enough carbon tax.”

So is the promised carbon tax large (and solid) enough to justify dealing away the triad of litigation, investment, and regulation? My colleagues and I at the Carbon Tax Center believe it is.

The proposal is gathering steam. Not just Exxon but a dozen other corporations, including General Motors, Procter & Gamble, Unilever, Pepsico, and three other oil companies (Shell, BP, and Total) formally endorsed the plan in June, along with the Nature Conservancy and the World Resources Institute. The political path for the Shultz-Baker carbon tax, not much wider than a human hair when it was launched last winter, is broadening rapidly.

Charles Komanoff, an economist, directs the Carbon Tax Center in New York City.

Just Posted: CTC’s Carbon Tax Model, Updated for 2017

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We’ve just posted the 2017 update to the Carbon Tax Center’s spreadsheet model of U.S. CO2 emissions. That’s our powerful but easy-to-use tool for predicting future emissions and revenues from possible U.S. carbon taxes. The model, which runs in Excel, accepts any carbon tax trajectory you feed it and spits out estimated economy-wide emission reductions and revenue generation, year by year.

Here’s what’s new:

1. A year of new data: The most obvious update is that we’ve incorporated 2016 baseline data on energy use, CO2 emissions and emission intensity into each of the model’s seven sectors.

2. Oil refining is now allocated to usage sectors: Last year we pulled oil refinery emissions out of “Other Petroleum Products” and into its own category, which accounted for an estimated 6.4% of U.S. CO2 emissions in 2015. We’ve now taken the logical next step and allocated those emissions into the economic sectors that require refining crude into product in the first place: autos (principally gasoline), freight (largely diesel), air travel (jet fuel) and the catch-all “other petroleum” encompassing home heating oil, propane, kerosene and residual oil used by industry. The lion’s share of Refineries’ 6.4% slice of CO2 emissions is now within autos; not only is gasoline by far the largest-volume petroleum product, it also consumes the most energy per unit among the major petroleum products. Although our model is again down to seven sectors, from eight, the change promises a more accurate prediction process by tying demand more closely to emissions.

3. Slimmed-down graphics: We’ve weeded out extraneous graphics so you can focus on what’s key: comparing emission reductions between the Climate Leadership Council’s carbon tax, a carbon tax pegged to the “social cost of carbon,” and future emissions absent carbon pricing. Other graphics break down emissions by sector (see graphic above), depict reductions in oil consumption and show carbon-tax revenues nationally and by household. Most importantly, you can input your own starting tax level and growth path and see how fast (or slowly) emissions fall. That’s still done in the spreadsheet’s “Summary” tab, which we’ve cleaned up to make it easier to navigate.

And don’t overlook these two features we added in 2015:

Our familiar pie chart now assigns refinery emissions to end-use sectors.

1. Smoothing the uptake of the carbon tax: The model now captures lags in households’ and businesses’ adaptation to more-expensive fossil fuels. You, the user, set the adaptation “ceiling” rate; the model automatically carries over any excess to future years. This feature is helpful for trajectories like the Whitehouse-Schatz bill, which kicks off with a bang at $45 per metric ton of carbon dioxide but then rises only slowly. Under our default setting, in which the economy in any year is assumed to be able to process only tax increments up to $12.50 per ton of CO2, the reductions from that initial $45/ton charge are spread over four years rather than, unrealistically, assigned to the first year.

2. Demand impacts vs. Supply side impacts: At the bottom of the Summary page is a new section comparing the projected CO2 reductions from changes in fuels’ carbon intensities (“supply side”) versus reductions from reduced energy usage (“demand side,” e.g., lower electricity purchases, less driving or flying). Under our default carbon tax — the one proposed by former Rep. Jim McDermott — an estimated 58% of projected CO2 reductions are on the supply side (i.e., due to decarbonization); a large minority, 42%, come about through reduced demand, illustrating that subsidies-only policies miss out on huge CO2 reductions. Indeed, clean-energy subsidies undercut decarbonization by stimulating energy usage through lowered energy prices, as we pointed out in our 2014 comments to the Senate Finance Committee.

Please download the spreadsheet — here’s the link again — and run it in Excel. See for yourself the relative efficacy of a carbon tax trajectory that increases by a fixed amount each year, as does the McDermott tax, vs. one like Whitehouse-Schatz that starts high but rises only by small, percentage-driven amounts. See also how much more quickly emissions decline under these and most other carbon tax scenarios, compared to the emission reductions from the Obama administration’s Clean Power Plan.

As you work (play?) with the model, jot down your thoughts so you can tell us what works and what needs improving. Especially the latter, as we just wrapped the update an hour ago and there are bound to be glitches. Thanks.

Carbon Tax Ferment in NYC’s Northern Suburbs

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Yesterday I biked to Grand Central Station and boarded a commuter train to the Hudson River village of Tarrytown to participate in a forum on carbon taxes. (For readers not from the area, Westchester is the suburban county immediately north of New York City.) My co-panelists were climate organizer Iona Lutey and economist Sara Hsu.

Flyer for the first of three forums in Westchester County (NY) this summer. See text at end for July 19 and 26 details.

Sara, a professor of economics at the State University of New York, outlined her research and legislative advocacy for a NY State carbon tax, while Iona delivered Citizens’ Climate Lobby’s hopeful message that persistent but collegial citizen engagement can build political will for the group’s “carbon fee and dividend” proposal, even among Republicans. I had a subtle pitch: emissions are falling in the U.S. and flattening in China without the benefit of carbon emissions pricing, yet carbon taxing is essential to accelerate and broaden progress.

I usually make that point with modeling results, but last night I brought something new: a Powerpoint page (shown below) listing a dozen complementary pathways for reducing use of fossil fuels that need the price signal from a carbon tax to. (Download my PPT here.)

All three presentations seemed to hit home with our audience of 40 or so folks, most of whom haled from nearby towns and villages. (The local paper Hudson Independent has a fine summary.) The Q&A was unusually lively. A resident of nearby Croton-on-Hudson had perhaps the most provocative question of all: why trade away the right to sue the fossil fuel purveyors and extractors, as the Climate Leadership Council is proposing in its Republican-branded carbon tax deal, when successful litigation could deliver a double-barreled victory: bankrupting the carbon barons while providing financing for the energy transition to efficiency and renewables?

The question was in response to the support I voiced for the Climate Leadership Council’s deal in my talk and in my previous post here. My primary answer then and now was that there seems to be little chance that oil, coal and gas companies could ever be made to pay more than token amounts for the ruin their products cause. But the question deserves further thought, which I kicked off this morning with this thought experiment:

What if we took all U.S. CO2 from burning fossil fuels over the past century and split “responsibility” for it 50-50, with half of the costs written off as the “fault” of consumers (who weren’t entirely innocent buyers and burners of all that gasoline and fuel-based electricity), and the other half charged to the fossil fuel producers? What magnitude of damages and reparations would that entail?

A slide from my presentation in Tarrytown yesterday.

A molecule of carbon dioxide remains in the atmosphere for roughly a century, so we need to consider 100 years of fossil fuel combustion. The historical magnitude of U.S. CO2 is more or less known, but for this exploratory calculation we might rough-estimate the century’s total as 60 years worth of last year’s emissions of roughly 5 billion metric tons. To each metric ton we now apply a $50 “social cost of carbon,” though that’s almost certainly far too low, as I wrote here recently.

With these rough assumptions, the producers’ “debt” is then one-half of 60 years x 5 billion metric tons x $50 per ton, which equals $7.5 trillion. Paying that out as damages over, say 20 years implies an annual charge to the producers of $350-$400 billion. Interestingly, that’s the same as the annual revenue from a $75/ton carbon tax.

Let’s now say, improbably but hypothetically, that Congress enacted, and the courts approved, award of those damages to Americans (setting aside, for now, damage claims from the other 7 billion of the world’s people). Where would the money come from? It seems implausible that it could be clawed back from shareholders of the fossil fuel corporations. Could it come from raising the prices of the fuels over the next several decades, in which case it could function as a de facto carbon tax? But if so, why not just enact a carbon tax in the first place?

As you can see, I’m trying to wrestle with this issue. I welcome comments and suggestions.

Meanwhile, Sustainable Westchester and Westchester Power, organizers of last night’s forum, are hosting two more evening panels: Wednesday, July 19 in New Rochelle, and Wednesday, July 26 in Bedford Hills. Details here. I’ll be speaking at both.

Carbon dividends plan gains Exxon’s backing as public climate concern hits new high.

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The Climate Leadership Council today announced that it has won support for its carbon dividends plan from ExxonMobil and other major corporations, as well as prominent individuals including physicist Stephen Hawking. The news, reported in op-ed pieces, news stories and a full-page ad in the Wall Street Journal’s Washington, DC edition, comes just four days after release of a new poll suggesting that climate concern among U.S. voters is surging to new heights.

Graphic from NORC-AP poll released 6-16-2017 (annotation by CTC).

Let’s start with the poll, released last Friday by the widely respected National Opinion Research Center – Associated Press polling collaborative. While the June 16 NORC-AP press release led with Pres. Trump’s abysmal (64%) disapproval rating, the more momentous result was the one highlighted in the graphic.

Fifty-three percent of people polled called climate change “extremely or very important” to them personally, perhaps the first time a majority of U.S. respondents assigned climate change such a high level of concern. Indeed, climate is often viewed in political circles as a “low-salience” issue, one that people profess to care about but don’t act on politically.

The 53% figure belies that idea, though the response might have been heightened somewhat because respondents were asked to specifically rate climate (and other issues) rather than to name, say, “the three most critical issues to you and your family.” (The full poll may be downloaded here. See graphic below for a breakout of the climate responses.)

Climate change is now “extremely or very important” to a majority of Americans.

The apparent broadening of public concern could translate into repudiation of climate-denying and ignoring candidates in the 2018 Congressional primaries and elections. It may also provoke more members of Congress to endorse the Citizens’ Climate Lobby’s Republican Climate Resolution or take seriously the Climate Leadership Council’s Republican-branded carbon dividends plan.

That plan was formally endorsed today by ExxonMobil, along with fellow oil behemoths BP, Royal Dutch Shell and Total S.A.; industrial giants General Motors, Pepsico and Unilever; and prominent individuals like former NYC mayor Michael Bloomberg, former Obama Treasury Secretary and Harvard University ex-president Larry Summers, renowned physicist Stephen Hawking, and Nobel Laureate and Obama Energy Secretary Steven Chu.

CLC’s Wall St Journal ad. Click link in text at bottom for easier read.

The broadening of support, orchestrated by Climate Leadership Council executive director Ted Halstead, constitutes an effort to move simultaneously to the left and right: leftward with a relatively high starting carbon tax rate ($40 a ton) and the income-progressive “dividending” of tax revenues rather than cuts to corporate taxes; and rightward with the backing of ExonMobil, which many climate activists hold in contempt for its decades of funding a network of climate denialists who have helped paralyze climate action in the U.S.

From time to time ExxonMobil has said that it “supports” carbon taxes, but as we reported late last year, it has never backed actual carbon tax legislation and has limited its expressed interest to carbon taxes in the $20/ton range. ExxonMobil’s endorsement of the council’s plan is a step forward for the company that could portend support from other quarters long considered hostile or passive on carbon pollution pricing.

With a high starting tax rate, a commitment to disbanding most federal carbon regulation and an offer to indemnify carbon polluters from litigation over climate damage, the council’s proposal defines a broad new center that could eventually unite political forces from the left and right. That strategy appeared today to gain important validation from Michael B. Gerrard, the influential director of the Sabin Center for Climate Change Law at Columbia Law School and a widely respected environmental litigator. Gerrard told The New York Times, “If a sufficiently high carbon tax were imposed, it could accomplish a lot more for fighting climate change than liability suits.”

This link goes to the council’s WSJ ad. Treasury Secretaries emeriti Larry Summers and George Shultz have an op-ed in today’s Washington Post, This is the one climate solution that’s best for the environment — and for business. Links to other op-eds and news coverage are at the Climate Leadership Council’s Web site.

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.

 

 

 

 

 

 

“A climate solution where all sides can win”

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Perhaps no one in the U.S. has done more lately to drive public and political opinion toward carbon taxes than Ted Halstead and his Climate Leadership Council. The council’s Conservative Case For Carbon Dividends is the first Republican-based carbon tax proposal to insist not only on starting high (at $40 per ton of CO2) but also “dividend-ing” the revenues to U.S. families rather than using them to pay for corporate tax cuts (as favored by the political right) or investing them in transit, renewables and other elements of “the just transition” (as favored by much of the left).

This income-progressive but limited-government path, which Halstead and the council astutely brand as Republican, has generated a broad swath of editorial support, not just on the two coasts but also in conservative, carbon-heavy Texas. Partly that’s because the proposal would downsize or outright rescind direct federal regulation of carbon emissions, which the council argues would be mooted by the market pull of a robust (and rising) carbon tax. It’s also because Halstead has the verbal facility and personal magnetism to make his points appealing and convincing.

Not just his first name, then, makes Halstead an ideal “TED” talker, as you can see in the 11-minute talk (13, counting Q/A with moderator Chris Anderson) he taped in April and released yesterday.

Below, we present an abridged version of Ted’s talk. The full transcript can be viewed along with the video presentation.

We need a killer app to climate policy. In the technology world, a killer app is an application so transformative that it creates its own market, like Uber. In the climate world, a killer app is a new solution so promising that it can break through the seemingly insurmountable barriers to progress.

These include the psychological barrier. Climate advocates have long been encouraging their fellow citizens to make short-term sacrifices now for benefits that accrue to other people in other countries 30 or 40 years in the future. It just doesn’t fly because it runs contrary to basic human nature.

Next is the geopolitical barrier. Under the current rules of global trade, countries have a strong incentive to free-ride off the emissions reductions of other nations, instead of strengthening their own programs.

Finally, we have the partisan barrier. Even the most committed countries are nowhere near reducing emissions at the required scale and speed. And the partisan climate divide is far more acute here in the United States. We are fundamentally stuck, and that is why we need a killer app of climate policy to break through each of these barriers.

I’m convinced that the road to climate progress in the United States runs through the Republican Party and the business community. So in launching the Climate Leadership Council, I started by reaching out to a who’s who of Republican elder statesmen and business leaders, including James Baker and George Schultz, the two most respected Republican elder statesmen in America; Martin Feldstein and Greg Mankiw, the two most respected conservative economists in the country; and Henry Paulson and Rob Walton, two of the most successful and admired business leaders. Together, we co-authored “The Conservative Case For Carbon Dividends.” This represents the first time that Republican leaders put forth a concrete market-based climate solution.

Our carbon dividends solution is based on four pillars.

1. The first is a gradually rising carbon tax. Although capitalism is a wonderful system, like many operating systems, it’s prone to bugs, which, in this case, are called “market failures.” By far the largest is that market prices fail to take social and environmental costs into account. That means every market transaction is based on incorrect information. This fundamental bug of capitalism, more than any other single factor, is to blame for our climate predicament.

In theory, this should be an easy problem to fix. Economists agree that the best solution is to put a price on the carbon content of fossil fuels, otherwise known as a carbon tax. This would discourage carbon emissions in every single economic transaction, every day of the year. However, a carbon tax by itself has proven to be unpopular and a political dead end. The answer is to return all the money raised directly to citizens, in the form of equal monthly dividends. This would transform an unpopular carbon tax into a popular and populist solution, and it would also solve the underlying psychological barrier that we discussed, by giving everyone a concrete benefit in the here and now.

According to the US Treasury Department, the bottom 70 percent of Americans would receive more in dividends than they would pay in increased energy prices. That means 223 million Americans would win economically from solving climate change. And that is revolutionary, and could fundamentally alter climate politics.

2. But there’s another revolutionary element here. The amount of the dividend would grow as the carbon tax rate increases. The more we protect our climate, the more our citizens benefit. This creates a positive feedback loop, which is crucial, because the only way we will reach our long-term emission-reduction goals is if the carbon tax rate goes up every year.

3. The third pillar of our program is eliminating regulations that are no longer needed once a carbon dividends plan is enacted. This is a key selling point to Republicans and business leaders. So why should we trade climate regulations for a price on carbon?  Our plan would achieve nearly twice the emissions reductions of all Obama-era climate regulations combined, and nearly three times the new baseline after President Trump repeals all of those regulations. Our plan by itself would meet the high end of America’s commitment under the Paris Climate Agreement, and the emissions reductions would continue over time. We would end up with less regulation and far less pollution at the same time, while helping working-class Americans get ahead. Doesn’t that sound like something we could all support?

4. The fourth and final pillar of our program is a new climate domino effect, based on border carbon adjustments. Now that may sound complicated, but it, too, is revolutionary, because it provides us a whole new strategy to reach a global price on carbon, which is ultimately what we need. Once one major country or region adopts carbon dividends with border carbon adjustments, other countries are compelled to follow suit [to prevent paying border adjustments to countries with carbon taxes]. One by one the dominoes fall. And this domino effect could start anywhere.

Let’s take China as an example. China is committed to reducing greenhouse gas emissions, but what its leaders care even more about is transitioning their economy to consumer-led economic development. Well, nothing could do more to hasten that transition than giving every Chinese citizen a monthly dividend. In fact, this is the only policy solution that would enable China to meet its environmental and economic goals at the same time.

That’s why this is the killer app of climate policy, because it would enable us to overcome each of the barriers we discussed earlier: the psychological barrier, the partisan barrier, and, as we’ve just seen, the geopolitical barrier. All we need is a country to lead the way. And one method of finding what you’re looking for is to take out an ad. So let’s read this (shown at left) one together.

 

 

House GOP resolution plants a marker for eventual climate action

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

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

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

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

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

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

The resolution kicks off with this “whereas”:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

A Way Forward for Carbon Taxes

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

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

  — Charles

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Carbon Tax Center Backs Climate Leadership Council’s Carbon Tax Proposal

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February 8, 2017, 9:30 a.m. • For Immediate Release

The Carbon Tax Center voiced strong support this morning for a proposal by the Climate Leadership Council to enact a comprehensive nationwide carbon tax starting at $40 per ton of carbon dioxide and rising over time.

The Council is scheduled to release its proposal, “The Conservative Case for Carbon Dividends,” at the National Press Club this morning, Wednesday, Feb. 8, at 9:30 a.m.

A $40/ton carbon tax starting in 2018 and rising by $5/ton each year would, by 2030, reduce U.S. emissions by 2.3 billion metric tons from 2005 level.

Modeling by the Carbon Tax Center suggests that a $40/ton carbon tax starting in 2018 and rising by $5/ton each year would, by 2030, reduce U.S. emissions by 2.3 billion metric tons from 2005 level.

A $40 per ton tax on carbon pollution starting in 2018 and rising thereafter by $5 per ton each year would, by 2030, reduce annual U.S. CO2 emissions from levels in 2005 (a common baseline year) by an estimated 2.3 billion metric tons, a 40 percent reduction.

Alternatively, measured against a moving “business as usual” trajectory with no national carbon price, the 2030 reductions would be 1.4 billion metric tons a year, or nearly 30 percent of unpriced emissions projected for that year.

(The Council’s proposal envisions that “A sensible carbon tax might begin at $40 a ton and increase steadily over time.” We chose $5/ton as a politically palatable annual rate of increase, and modeled such a tax using our carbon tax model.)

“The robust carbon tax proposed by the Climate Leadership Council would vault the U.S. from the middle to the head of the global pack in reducing heat-trapping, climate-damaging emissions,” said Carbon Tax Center director Charles Komanoff. “It would also provide a template for other nations to follow, creating a real possibility of keeping the rise in global temperatures to 2 degrees Centigrade or less,” Komanoff said.

Using CTC’s model, Komanoff calculated that the future emissions reduction rate with the Council’s carbon tax would surpass by 50 percent the actual reduction rate since 2005, “a major achievement,” he said, “given that the past reductions were largely enabled by eliminating much coal-burning – the lowest-hanging fruit in eliminating carbon.”

CTC also endorsed the political “swap” in the Council’s proposal to rescind the Obama administration’s Clean Power Plan. “The important work of the Clean Power Plan was largely completed anyway,” said Komanoff, pointing out that well over 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,” he said, “instilling incentives throughout the U.S. economy to replace fossil fuels with clean energy.”

CTC further endorsed the Council’s proposal to “dividend” the carbon tax revenues to U.S. households on a quarterly basis. “We’ve studied ‘fee-and-dividend’ for years, and can vouch that it’s the most equitable, least bureaucratic and least corruptible way to distribute the hundreds of billions of dollars of revenue from a carbon tax, while also generating jobs,” Komanoff said.

Komanoff sounded a cautionary note about the dogged resistance of Congressional Republicans to climate action, but added that the Council’s proposal hits all the right marks for a business-friendly, small-government climate policy. “Republicans looking for a way out of their denialist, obstructionist stance on climate have been handed a lifeline,” he said. “Their children and grandchildren are counting on them.”

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About CTC: Since 2007, the Carbon Tax Center has stood at the front lines of the struggle for a sustainable climate and a habitable Earth. Our mission: to generate support to enact a transparent and equitable U.S. carbon pollution tax as quickly as possible — one that rises briskly enough to catalyze virtual elimination of U.S. fossil fuel use within several decades and provides a template and impetus for other nations to follow suit.