Republicans Offer to Tax Carbon Emissions

Scientific American
February 8, 2017
By Dave Levitan

A group of prominent Republicans released a “conservative” plan to reduce carbon dioxide emissions today, arguing that replacing Obama-era policies with a carbon-tax-and-dividend system would be a politically feasible way to fight off the worst effects of climate change.

The plan, released by the Climate Leadership Council in a report titled “The Conservative Case for Carbon Dividends,” would tax carbon beginning at $40 per ton. The price would then rise each year to help push emissions down. The revenues generated—about $194 billion in the first year, rising up past $250 billion within a decade—would then be redistributed by the Social Security Administration in the form of quarterly checks to every U.S. household. Proponents hope that idea would swing public support toward aggressive climate change mitigation.

“If you look at the priorities of President Trump, our plan ticks every one of his boxes,” said Ted Halstead, founder and president of the council, in a press conference in Washington, D.C., this morning. “It is pro-growth. It is pro-jobs. It is pro-competitiveness. It would balance trade. And last but hardly least, it would be good for working-class Americans.”


Noah Kaufman, an economist with the non-profit World Resources Institute, said that if implemented as written, the new plan would achieve the Obama policies’ cuts “and much more.” Not only does this plan work on all sources of carbon emissions rather than just the power sector, but its starting point for a price on carbon far exceeds the effective price that the Clean Power Plan would have achieved, Kaufman said. A 2016 World Bank report found that of the various carbon pricing systems in use around the world, “about three quarters” of all emissions covered are priced at less than $10 per ton. Higher carbon prices mean a bigger incentive to cut emissions.

Still, some environmental groups and other experts are not huge fans of replacing all the work done over the last eight years. The Natural Resources Defense Council released a statement saying that although a price on carbon “could be an important part” of climate mitigation, “it can’t do the job alone.” A Brookings Institution expert wrote that setting aside some of the carbon tax revenue—$30 billon is the suggested starting point—to be used for clean energy research and development might help the plan achieve its emissions reduction goals.

Kaufman said that the most important point is the “tax” part of tax-and-dividend—what one does with the revenue is a secondary consideration, but offering the money back to the public could be a political winner. “An approach like this, where you sort of give the money back to the people, has real political advantages, especially for those who don’t instinctively trust the government,” he said. At the press conference, Halstead said a Treasury Department analysis showed that Americans in the bottom 70 percent of income—223 million people—would “come out ahead” with this approach; the checks received would outweigh any price increases in goods that are carbon taxed, such as gasoline.

Of course, getting the new administration and prominent congressional Republicans on board with any carbon-reduction plan would be something of a coup. The revenue neutrality of this plan, though, where theoretically the government does not grow in size at all, could break through. “It has so few moving parts,” Komanoff said. “It’s quite elegant, and I think it could be politically palatable.”