By David Doniger, Natural Resources Defense Council
A group of GOP elder statesmen, economists, and business leaders have proposed a carbon tax to address the growing dangers of climate change.
It’s welcome and long overdue to see prominent Republicans acknowledge that “Mounting evidence of climate change is growing too strong to ignore,” and that “the risks associated with future warming are too big and should be hedged.” Also welcome is their recognition of the “needless climate divide between the GOP and the scientific, business, military, religious, civic and international mainstream.” And as James Baker said in today’s press conference, America needs to “lead from the high ground” in the global effort to stem climate change.
These senior Republicans are trying to help their party find a way out of its cul-de-sac of climate denial and inaction. Whether President Trump and GOP Congressional leaders are interested remains to be seen. And how their proposal evolves, if anyone is interested, also remains to be seen.
But while giving the Climate Leadership Council members credit for their serious intentions, there are serious problems with their proposal.
1. We Need All the Tools in the Toolbox
What’s critical is that we cut carbon pollution fast enough to avoid the worst impacts of climate change. We have a moral obligation to avoid catastrophic climate disruption, and we need deep cuts in global carbon pollution by mid-century to meet that obligation. That’s the objective of the Paris Climate Agreement, with its goal of limiting warming to 1.5-2 °C.
America has to do its part, starting by meeting our commitment under Paris to cut carbon pollution 26-28 percent below 2005 levels by 2025. And we have to step up for further commitments in 2030 and later years.
Putting a price on carbon could be an important part of a comprehensive American program, combined with carbon limits under the Clean Air Act and other laws, and tax incentives for cleaner energy. But a carbon tax can’t be counted on to do the job by itself, and it is not an acceptable replacement for carbon limits under our current laws.
What matters to the atmosphere is how many tons of carbon dioxide and the other heat-trapping pollutants it is forced to carry. The climate doesn’t care how much we charge for carbon pollution. The only thing it cares about is how much carbon pollution we produce. That’s why we need science-driven limits on carbon pollution.
Carbon taxes are one tool we can use to affect how much carbon pollution we produce. But economists can’t guarantee what amounts of pollution will result from any given prices. The sponsors provide a back-of-the-envelope estimate that we’d see a 28 percent emission reduction from 2005 levels from their proposal ($40/ton of CO2 starting in 2019, and increasing 2% per year above inflation), but that is only an estimate. Even more sophisticated economic modeling provides only projections, not a guarantee.
The atmosphere needs a guarantee, and that’s why we need firm carbon pollution limits in addition to carbon prices.
We actually had a great example of using both tools in the U.S. implementation of the phase-out of ozone-destroying chlorofluorocarbons (CFCs) under the Montreal Protocol, which George Shultz and James Baker point to with justifiable pride. For CFCs we had a phase-out schedule under the 1990 Clean Air Act and an excise tax also adopted in 1990. Together, they cut CFCs much faster than planned.
So, in principle, we’d support adding carbon pricing to the toolbox, alongside regulation. We oppose any rollbacks in the current Clean Air Act and the other laws that provide for carbon limits, such as our vehicle fuel economy and appliance efficiency laws.
If Congress adopted, and stuck with, carbon prices that actually achieve the needed reductions, perhaps we wouldn’t need to add new regulatory limits. But we must keep the authority, and the rules on the books.
We can’t give up the lamp we have for the promise of a newer, shinier one.
2. We Need Regulations and Incentives, as Well as Carbon Prices, for Breakthrough Technologies
In addition to the guaranteed overall results that carbon pricing can’t provide, carbon limits can deliver some other things better than pricing.
Carbon pricing is unlikely to spur R&D and deployment of the big new breakthrough technologies necessary to avoid climate change’s worst impacts. A combination of carrots and sticks, like those for electric cars and carbon capture and storage for power plants, are more effective at driving early investments in these efforts. These technologies may be expensive at the start – until learning curves kick in and reduce costs—or take a long time to produce investor returns.
We need those technologies to make the very deep carbon reductions necessary by mid-century (now only three decades away). We won’t get them fast enough with carbon taxes alone.
3. Carbon Polluters Don’t Deserve Immunity for the Harms They’ve Caused
In addition to scrapping our current Clean Air Act and other regulatory tools, the sponsors propose immunizing carbon polluters from federal and state tort law, even though the biggest carbon polluters have long known the risks they were imposing on the American people. This would be a huge injustice.
We need a solution going forward. But that shouldn’t give polluters immunity for the damage they have caused in the past, or the damage their future emissions will cause. That’s a basic principle of American law.
4. Details Matter
The first thing we need to see is if the Trump administration or the GOP Congress shows any interest in coming out of their cul-de-sac. If so, there’s room for lots of engagement and creative work on solutions, within the principles laid out above.
We can work on the best way to combine the tools for pricing and limiting carbon pollution.
We can work on how carbon dividends should be distributed. This is a good idea; as the sponsors say, it can make sure increases in fuel costs are offset for those who need the help most, and as a partial remedy for America’s yawning income inequality. This is much better than using carbon revenue for corporate tax breaks, for example.
We can work on how border adjustments should be structured. This is another good idea, provided it is kept workable and fair.
We will not support abandoning the Clean Power Plan or the other regulatory advances we’ve made, nor will we countenance any weakening of the Clean Air Act and our energy efficiency laws. And we will not support depriving climate victims of their legal rights.
Once again, it’s welcome to see prominent Republicans acknowledge the gravity of climate change, the need for action, and the need for their party to move out of the cul-de-sac of denial they’re stuck in. Let’s see if the Trump team and Republican officeholders respond.