Report: Tax and dividend cheaper than regulations

E&E News
December 18, 2020
By Timothy Cama

A carbon tax-and-dividend policy would be far less costly to the economy than similar greenhouse gas reductions achieved through regulatory means, according to a new analysis.

The analysis found that implementing the plan pushed by the Climate Leadership Council would result in a $420 billion greater gross domestic product annually than a regulatory approach by 2036, with $1,260 more in average per-household consumption.

The research was conducted by NERA Economic Consulting Inc. and commissioned by CLC, an organization backed by major businesses, Republicans and others pushing for a $40-per-ton carbon tax whose proceeds would be returned to taxpayers.

“From a carbon reduction perspective, from an economic perspective, from an American competitiveness perspective, this is the plan you’d want to go with,” Greg Bertelsen, CLC’s CEO, told E&E News.

One major key to the economic findings in the report is the conclusion that various businesses and industries would work together to reduce their emissions if they were subject to a tax, which would not happen as much with a regulatory approach, Bertelsen said.

The report comes weeks before President-elect Joe Biden is due to take office, bringing what he sees as a distinct mandate to fight climate change aggressively.

That climate agenda is likely to lean heavily on regulations, including greenhouse gas limits for the power sector, autos, and oil and natural gas producers.

Carbon pricing, meanwhile, has largely fallen out of favor among progressives, although Biden is open to the idea. But with the GOP likely to retain the Senate majority, any major climate proposal is unlikely to pass Congress.

Under CLC’s plan, the carbon tax would increase each year. The plan would also prohibit federal officials from using some regulations to limit greenhouse gases, while imported and exported goods would be subject to tariffs or rebates if the trading country does not have strong climate policies.