A group of prominent Republicans just launched a longshot bid for a carbon tax

Science Magazine
February 8, 2017
By Hannah Hess, E&E News

Former Secretary of State James Baker led a group of senior Republican statesmen today in rolling out a plan for using a carbon tax to reduce greenhouse gas emissions.

The four-pillar proposal calls for a revenue-neutral carbon tax starting at $40 per ton.

Ahead of a White House meeting with Gary Cohn, the former Wall Street executive who is President Trump’s economic adviser, Baker acknowledged in a Washington press briefing that his Climate Leadership Council faces an “uphill slog,” despite what he framed as the proposal’s populist appeal.

“You can’t look at this as a tax, even though the word ‘tax’ is used,” Baker said.

Dubbed the “Republican climate jailbreak strategy,” the plan calls for taxes to be collected at the source — on oil at the refinery, for instance — then built into the prices for products made from that material. Revenue would be returned to taxpayers, amounting to about $2,000 annually for a family of four.

“Two-thirds of American households will receive more in carbon dividends than they will pay directly in carbon taxes,” said Martin Feldstein, who served as chairman of President Reagan’s Council of Economic Advisers.

Most people, he said, would be “net financial winners.”

In addition to Baker and Feldstein, other council members are George Shultz, secretary of State under Reagan; Henry Paulson, President George W. Bush’s Treasury secretary; and N. Gregory Mankiw, who chaired Bush’s Council of Economic Advisers. The group also includes Thomas Stephenson, a partner at venture capital firm Sequoia Capital; Rob Walton, former chairman of the board at Wal-Mart Stores Inc.; and Ted Halstead, the council’s founder.


Putting the plan in motion would require congressional action, Baker said, but the focus starts with Trump.

If implemented, the proposed tax would likely reduce U.S. greenhouse gas emissions 28 percent by 2025, according to an analysis by two leading scholars on energy-related policy.

The proposal’s co-authors are David Bailey, who spent 35 years in the fossil fuel industry and worked on Exxon Mobil Corp.’s climate policy, and David Bookbinder, who has litigated cases under all of the major environmental statutes, including, as the Sierra Club’s chief climate counsel, the Supreme Court’s landmark Massachusetts v. EPA decision.

Mankiw characterized the plan as a “panacea.”

The government will continue to “lurch back and forth” between so-called command-and-control standards on carbon emissions and the deregulatory approach favored by conservatives without such a policy, Mankiw argued, which “makes long-term planning all the more difficult.”

Reprinted from Greenwire with permission from E&E News. Copyright 2017. E&E provides essential news for energy and environment professionals at www.eenews.net