On February 8, a group of establishment Republicans unleashed what they consider to be a wild and totally out-there idea on how Americans can make more money with a carbon tax proposal.
Hate to break it to you Republicans, but this isn’t as innovative as it sounds. Every few years, economists or ex-politicians try to sell the Grand Old Party on a carbon tax as the ultimate free-market, efficient, conservative climate solution. It’s always heralded as a big breakthrough in climate policy. And it never gets any traction.
The “Conservative Case for Climate Dividends” (because… don’t call it a tax) is enjoying such accolades at the moment. It’s even being cheered as a “thought-provoking plan,” “historic,” a “fantastic Republican idea,” and a dramatic reversal of course for the GOP.
Yet the very novelty of the proposal exposes what it really is: A reflection of how drastically out of step the modern Republican party is with both climate science and the American public’s concern about climate change. If we had a climate-literate government, this proposal simply wouldn’t stand out, representing a conventional conservative view on how best to let the free market solve an environmental and economic problem.
[quote position=”right” is_quote=”true”]The Treasury Department figured that roughly 70 percent of Americans would make money under such a deal.[/quote]
On its face, the proposal is a $40 per ton tax on carbon dioxide emissions, with all of the money raised returned to Americans via dividend checks. In exchange for the cash on carbon, advocates are asking for a repeal of all greenhouse gas regulations through the Environmental Protection Agency.
But before we talk about why the proposal is a bad faith deal that is too little, too late, and doesn’t stand a snowball’s chance (in a rapidly warming world) of breaking through Congress, let’s consider its mechanics and try to find a few positives in the Conservative Carbon Dividend Plan’s four pillars:
1. A sensible tax plan
A reasonable carbon tax is at the heart of this plan. The $40 per ton would potentially increase over time—perhaps by $5 per ton every year. For what it’s worth, that’s roughly in line with the Obama administration’s calculations of the social cost of carbon at $36 per ton (which itself was criticized by climate experts as being far too low and by fossil fuel industry apologists as being unreasonably high). It’s well above average for existing carbon pricing schemes in place around the world, but the pricing trajectory is still well below the hundreds of dollars per ton that many credible analyses say is necessary to keep climate change from reaching truly perilous levels.
That said, Charles Komanoff of the Carbon Tax Center formally endorsed the proposal. Komanoff ran the proposed pricing through his model and found that it would yield a 40 percent reduction in carbon dioxide emissions by 2030.
2. Carbon refunds for all Americans
All of the proceeds raised by the tax would be refunded to the American people through quarterly dividend checks mailed out to everyone with a social security number. The authors say the introductory $40 carbon tax would mean about $500 per year per citizen (or $2,000 per year for a typical family of four).
3. Taxation on imported goods
The tax would be applied to all imported goods from countries without “competitive carbon pricing,” and these so-called border adjustments would help protect American manufacturing. (Conversely, goods exported to countries without equivalent pricing would be exempt.)
4. Cutting regulations
Current greenhouse gas regulations like the Clean Power Plan would be cut.
What does this mean in the real world? Let’s suspend disbelief for a moment and pretend that this proposal wouldn’t be carved up and weakened and stuffed full of exemptions and loopholes in order to pass through Congress.
At surface level, it’s a fairly elegant and clever design—one that closely resembles bills introduced repeatedly by Democratic Rep. Chris Van Hollen of Maryland, and championed by revered climate scientist James Hansen. If the revenue truly is divided up equally among all Americans, then it’s essentially progressive. Lower-income folks would actually come out ahead, as the increase in costs for electricity and gas and food and products would be less than the dividend checks they get in the mail. In fact, the Treasury Department figured that roughly 70 percent of Americans would make money under such a deal.
[quote position=”left” is_quote=”true”]To take this deal would be to let fossil fuel companies off the hook for the sins of their past.[/quote]
Those who would fare poorly with this deal would be the ultra wealthy; their enormous carbon footprints would come at a much higher price, which the $2,000/year dividend would take only a small nibble out of. No sympathy there. And it’s hard to argue with the third pillar, especially as the politics of climate action have been so hamstrung by alarmist arguments about how carbon pricing will kill American competitiveness.
So far, so good. But when it comes to the fourth pillar—the regulatory rollback—well, that deserves its own section.
Too many poison pills
The authors suggest that “the initial carbon tax rate should be set to exceed the emissions reductions of current regulations.” Why then, you might logically ask, do you need “the elimination of regulations that are no longer necessary” at all? Perhaps because you have consulted with the big oil and gas companies and know that they are already factoring modest carbon pricing into their operations. Or perhaps you know that the carbon prices you’re suggesting aren’t going to yield the greenhouse gas reductions that the science is demanding.
Imagine this deal gets done, and in 10 years, the carbon tax isn’t cutting emissions as quickly as we need. Then what? If you earnestly believe that the carbon tax will continue to increase at a rate that the science tells us is necessary, then there would be no reason to cut the strings of a regulatory safety net.
Hiding in that fourth pillar is another poison pill, which could be even more important to Big Oil than the stripping of regulations. “Robust carbon taxes would also make possible an end to federal and state tort liability for emitters.” This is likely in response to the ongoing litigation and investigations by state attorneys general over what Exxon knew about climate change and its long-running cover up. In recent years, a group of kids and an Alaskan village have been among those who have filed claims against fossil fuel companies for contributing to climate change, and state attorneys general in New York and Massachusetts are investigating Exxon over its alleged climate fraud and conspiracy. To take this deal would be to let fossil fuel companies off the hook for the sins of their past.
It’s progressive, but is it just?
While true that a tax-and-dividend scheme like the one proposed is progressive—assuming the rebate is split equally—there’s a deeper issue of climate and environmental justice that this type of system neglects. Plenty of logical arguments have been made about how such a rebate plan promotes economic equity, but those typically come from white guys far from the front lines of climate impacts. As another such privileged white guy, I feel compelled to defer to someone who can speak to this more personally and expertly.
Jill Mangaliman, executive director of Got Green and a Seattle community activist who—along with Van Jones, Naomi Klein, and a whole host of progressive organizations that care deeply about both climate change and justice—fought against the recent carbon tax ballot initiative in Washington state, wrote in The Stranger:
A tax rebate provides no new solutions for workers who need to enter clean energy jobs, for a mother that wants to catch a bus to work, or for a business that wants to invest in a green building…
Creating a just transition for workers, for frontline communities, and creating low-carbon infrastructure is not just a moral obligation, it’s a tactical obligation for so called “climate hawks.” We will never get to more ambitious climate solutions if we don’t support the people who are most harmed by fossil fuels and the people most impacted by the transition…
There is a better way: Let’s put a price on carbon and invest the money in green jobs, clean energy, and the communities hit first and worst by fossil fuels.
In essence, a far more effective and fairer way to combat climate change is to put a price on carbon and use the money to fund the just transition that is so sorely overdue for the worst impacted and most vulnerable communities.
Also, it’s a unicorn
Plenty of conservatives support a carbon tax in theory. Even ExxonMobil has lobbied for a carbon tax. Yet, as Brad Plumer notes in Vox, “so far, these campaigns have attracted public support from … exactly zero elected Republicans in Washington.”
[quote position=”left” is_quote=”true”]The tax rebate provides no new solutions for workers who need to enter clean energy jobs or for a mother who wants to catch a bus to work.[/quote]
The conservative carbon tax is, in essence, a unicorn—a fantasy that nobody will actually see fly. In Exxon’s case, the company’s support of a tax is a fairly blatant distraction from its fight against actual regulations and from its history of fraud.
For other conservatives, it provides some cover to talk seriously about an issue that the Republican party is otherwise terribly out of step with the American public. It’s a free market solution that polls incredibly well and, if ever miraculously passed through Congress, would be so weak that it would cause little real pain to fossil fuel companies.
Too little, too late
It’s too bad that Baker and Shultz didn’t come up with this idea and bring it to President Reagan when they served in his administration in the ’80s. Slapping a low price on carbon and lifting it steadily through the 1990s and 2000s could well have transformed our energy system from carbon-spewing fossil fuels to clean renewables in time to avoid the worst fates of climate change. Now it’s too late for that.
The science is clear, and anything less than a World War II-scaled mobilization to decarbonize our economy and tackle other greenhouse gas sources (leaking methane from fracking operations and deforestation, to name just two) means pushing our global temperatures into the high fever range. This may not be the climate solution we need, but at least it can be recognized as a legitimate policy intended to address a dire challenge.
