A Republican-backed group pushing for Congress to pass a carbon tax is out with a new study Friday showing it would significantly reduce emissions while unlocking more than $1 trillion of new investment into the economy.
The group, the Climate Leadership Council, is seeking to shore up support for carbon taxes as policymakers have gravitated toward other proposals.
Democrats, including presidential nominee Joe Biden, are instead embracing mandates for combating climate change, while Republicans oppose new taxes or regulations. The council, led by former Republican Secretaries of State James Baker III and George Shultz, is seeking to counter that.
“The report confirms and supports a belief we have held for a long time and what the economic community long has been saying,” said Greg Bertelsen, executive vice president of the council. “A price on carbon like ours is the single best way to spur mass amounts of innovation across the economy as we transition to a lower-carbon future.”
The council commissioned the research firm Thunder Said Energy to model its proposal for a carbon tax beginning at $40 per ton, increasing 5% every year. The proposal, dubbed a “carbon dividend,” would return the revenue to taxpayers through equal quarterly payments to offset higher energy prices.
Kaufman also said Biden’s mandate for utilities to use only zero-carbon power by 2035 would lead to a quicker phaseout of natural gas, the country’s most used power source that has helped reduce coal use in recent years.
The Climate Leadership Council’s study projects its carbon tax would increase natural gas use in the short term, rising 15% by 2023 from 2019, as it replaces coal at an accelerated pace.
That could incentivize new construction of gas plants in the longer term, the study says.
“There is going to be folks on the Left who will raise eyebrows when they see that,” Kaufman said. “A big shift to natural gas creates concerns about lock-in if we are talking about new infrastructure over the next decades.”
Wind and solar use, to be sure, would grow under the Climate Leadership Council proposal, from 10% of electricity in 2019 to 29% in 2035.
Bertelsen also notes a carbon tax applies across the entire economy, while a clean electricity standard is limited to the power sector, which is considered the easiest to decarbonize (albeit the most important).
“In terms of this being enough, no other policy being seriously discussed would do more to accomplish the underlying goals of climate change while also strengthening the economy, increasing investments in new technologies, and enhancing U.S. companies’ global competitiveness,” Bertelsen said.