The best solution for climate change is a carbon tax

By Ralph Nader
January 4, 2013

With Lisa Jackson, the head of the Environmental Protection Agency, stepping down, President Barack Obama is losing one of the few people left in Washington who was willing to speak up about global warming and to push for significant measures to curb its impact. During her tenure, Ms. Jackson was frequently denounced by GOP members of Congress and all too often reined in by Obama. Despite his and Congress’ failure to pass legislation addressing global warming, Ms. Jackson advanced a regulatory agenda to pick up some of the slack.

She managed to see that fuel efficiency standards will increase by 2025, enact stricter pollution controls that must be met before any construction of new coal-fired power plants, and established EPA’s “endangerment finding,” bringing carbon dioxide and five other greenhouse gases (GHGs) under the Clean Air Act. Her departure, however, highlights the failings of the Obama administration to address global warming in a significant way. In his second term, the president can change that by pushing to enact a carbon tax.

A carbon tax would place a fee on polluters that emit GHGs like carbon dioxide, methane, and nitrous oxide. It should be applied at major sources of GHG emissions: coal-fired power plants, petroleum refineries and importers, natural gas processors, and cement, steel, and GHG-intensive chemical plants. This tax would prod us away from dirty fossil fuels and toward clean energy alternatives to avert global warming while raising considerable revenue.

Global warming is happening, whether or not lawmakers on Capitol Hill want to acknowledge it. Unfortunately for the rest of us, the consequences of ignoring it are dire.

Given the already lackluster recovery, the future economic devastation from global warming looms many times larger than any “fiscal cliff.” A 2006 report from British economist Nicholas Stern estimated that if global temperatures increase 2-3 degrees Celsius in the next 50 years we risk losing up to 20 percent of global GDP – a loss similar to that of the Great Depression.

But global warming won’t just affect our pocketbooks. According to a report from DARA, an international humanitarian organization, if we do nothing, over 100 million lives will be lost by 2030 from our reliance on fossil fuels and the effects of global warming, including hunger, the spread of disease, air pollution, and cancer.

We are already feeling the impacts of a warming planet. In 2011 the Mississippi River experienced yet another “500-year flood.” Extreme weather events, like Hurricane Sandy, are becoming more common. This summer, western states saw blistering wildfires consume over 9 million acres, about 3 million more than the annual average over the last decade. Droughts ravaged our heartland’s crops. By the end of the summer, nearly two-thirds of the contiguous U.S. was experiencing moderate to exceptional drought. Philip Bump, writing for Grist, pointed out data from the National Oceanic and Atmospheric Administration showing that November was the 333rd consecutive month with global temperatures higher than the long-term average. If you are 27 years old, you’ve never experienced a colder-than-average month.

As one of the largest polluters in the world, the United States has a special responsibility to lead the way in tackling global warming. We emit 18 percent of worldwide CO2 emissions with just 4.5 percent of the world’s population. In 2010, the country was responsible for about 5.6 billion metric tons of CO2 emissions – more than the collective emissions of all the countries of Europe and, not counting China, as much as the next five largest CO2 polluters combined. All of this doesn’t even include the additional 1.2 billion metric tons of CO2 equivalent emissions that we spewed into the atmosphere from non-CO2 GHGs.

According to the world authority on the subject, the Intergovernmental Panel on Climate Change, a carbon tax on GHGs of $50 per metric ton of CO2 equivalents would be a good first step. With annual emissions of 6.8 billion metric tons of CO2 equivalents, the United States would collect $340 billion each year.

With revenue like that, a carbon tax could be used to help balance the budget. The policies discussed in the fiscal cliff debate were comparatively instructive. For example, extending the Bush tax cuts to all but the top 2 percent – as President Obama has suggested – would cost $171 billion each year in lost revenue. Preventing cuts to nondefense spending would cost $55 billion. Continuing to pay unemployment benefits would cost $26 billion. A carbon tax would pay for all of this and then some.

Despite the mounting dangers, most fossil fuel lobbies remain determined to prevent a carbon tax. They claim such a tax would lead to “carbon leakage,” where highly polluting industries move to countries without one. However, by 2013 some form of a carbon tax will be in place in 33 countries. Regardless, carbon tax advocates have proposed a fee on “energy imports” from countries without a carbon tax to equalize the price and prevent carbon leakage.

Another criticism is that a carbon tax disproportionately affects low-income consumers because they spend a larger proportion of their income on energy than do high-income individuals. But a study from the Congressional Research Service showed that tax rebates, while they would mean some reduction in tax revenue, could be successful in meeting  this challenge.

Despite its critics, a carbon tax has garnered broad support – even from unexpected places. Exxon Mobil’s chief executive has supported a carbon tax. Among conservatives, it has been supported by scholars at the American Enterprise Institute, former Congressman Bob Inglis (R-S.C.), Gregory Mankiw, an economic advisor to Mitt Romney’s campaign team, and Martin Feldstein, a top economist in Ronald Reagan’s administration.

Unfortunately, a vocal minority of “climate deniers” has stifled congressional action. If the overwhelming scientific evidence to the contrary won’t convince them, how about Harvard economist Martin Weitzman’s unique perspective using an insurance approach? Insurance is designed to prevent enormous losses and reduce the risk posed to an individual in the case of a catastrophic event – whether it is a car accident, a flood, or cancer. When we purchase insurance policies, we buy them hoping that we won’t need them – but in the event that we do, we are happy we made the investment.

Think about global warming in the same way: The potential for utter devastation in loss of life, fertile farmland, and infrastructure if climate deniers are wrong is too high to ignore. And like insurance, there are deterrence benefits to a carbon tax beyond the mitigation of economic risk. Spending part of the revenues from a carbon tax on incentives for displacement by clean energy, we would stimulate the economy, create jobs, and improve people’s overall health through reducing the pollution they and their children have to breathe.

It is time for some real action on global warming – we must not temporize anymore. Will our children and grandchildren look back upon our generation as one of endless gridlock? Or will they be thankful that Democrats and Republicans came together to help solve a major crisis by enacting a carbon tax?

PHOTO: EPA Administrator Lisa Jackson testifies before the National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling hearing on “the response to the BP Deepwater Horizon oil spill, environmental impacts, and approaches to restoration” in Washington September 27, 2010. REUTERS/Hyungwon Kang

36 comments

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Ralph Nader has it just right. Congratulations, and thank you. I’m currently working to get a carbon tax passed by our local congressmen.

Posted by jfxwsr | Report as abusive

Ralph Nader has it just right. Congratulations, and thank you. I’m currently working to get a carbon tax passed by our local congressmen.

Posted by jfxwsr | Report as abusive

Ralph Nader has it just right. Congratulations, and thank you. I’m currently working to get a carbon tax passed by our local congressmen.

Posted by jfxwsr | Report as abusive

Ralph Nader has it just right. Congratulations, and thank you. I’m currently working to get a carbon tax passed by our local congressmen.

Posted by jfxwsr | Report as abusive

Here in BC we have had a carbon tax since 2008. Yes, some said the sky would fall.
Even Chicken Little jumped on that bandwagon but alas, the sky is still there, people are driving about, employment is low. In fact, it seems this much debated tax may give provinces/states/nations an economic edge in the race to create environmentally sound technology that will supply new sources of clean energy. Take that Mr Little.

Posted by jroberts | Report as abusive

I agree with everything you say, Mr. Nader. I only wish that you would have not run as a third party candidate in 2000. Al Gore would have been President and perhaps he would have named you Head of the EPA. I still grieve that election’s outcome and I will until climate change action is a reality worldwide. We have lost 12 years since 2000 and I wonder what we may have accomplished in that time..do you?

Stacy Clark
Dallas and Boston

Posted by StacyClark | Report as abusive

One great quality of a carbon tax instead of cap and trade, is elimination of the cost of profits provided to traders.

Another is that a tax, levied on all carbon fuels wherever they enter the economy, will actually be an effective way to begin to include the considerable real, externalized, environmental costs of their use.

However, in order for such a levy to be iintroduced, the almost insurmountable influence of special interests must be overcome.

The only way an effective carbon tax will be politically viable is to return all of the proceeds to the adult population of the United States. In this way, the support of the electorate may be engaged with sufficient vigor to overcome the very effective resistance that will be offered by the energy corporations and their minions in government and the commercial media.

This approach presumes that the real motivation and intention of such a fee is to rapidly reduce the use of carbon fuels, rather than raise revenue for redistribution by elected officials to those same special interests!

Posted by StormPetrol | Report as abusive

Introducing a market mechanism to tackle greenhouse gas pollution is separate question than the overall level of tax and other efforts to tackle these issues (investment in transit etc.).

The Carbon consumption tax should be applied to imports, exempt exports (jast like value added taxes – VAT, GST), and be slightly more than offset by other tax cuts.

This inoculates us from the need for industry specific changes to ensure that we remain competitive.

The tax code can be made simpler by removing other inefficient or complex taxes.

Taxes are a good way to address externalities.

People concerned with the damage to the economy should also look at both the damage from the other taxes we can remove or reduce, and the risks of economic damage from climate change.

Posted by OneThing | Report as abusive

Carbon tax will only mean more pollution abroad and less work for Americans unless it is applied at the point of sale and includes the cost of shipping. By using the constitutionally dubious process of mandating that domestically produced goods and energy it only incentives corporations to look elsewhere to produce. Even if a factory itself doesn’t produce CO2 the higher energy costs will shift jobs overseas just as they are starting to come back. I urge you Mr. Nader to think about tackling climate change in an era of globalization, and to consider the vast majority of us that have to work in the real world when enacting legislation. The American workers should not be the only ones to bare the costs of CO2 reduction, and if we are then it will surely fail as levels will rise elsewhere. Other countries may be considering carbon tax, but they aren’t the sweat shop states.

Posted by agsocrates | Report as abusive

If households can rebate the GHGs tax from the government, there are no incentives for them to change the way how they’re consuming the power. The power plants owners can make the electricity prices higher to absorb the GHGs tax, so no incentives to shut their business down. Overall this policy just makes all goods’ prices become less affordable, and because nuclear power doesn’t bear any tax, this might mislead more nuclear power plants been built. The best way would be to guide the capital to the clean energy industries, for example, reduce the tariff on the material for solar panels and wind turbine manufacturing, etc. To create competitors against the fossil industry by enlarging the whole economy will be smarter.

Posted by Great1973 | Report as abusive

One problem with this article is that the solution doesn’t fix the problem. Taxing carbon for all its worth doesn’t necessarily mean a reduction in emissions. If the product of the goods is inelastic then rising costs doesn’t change behavior as much as desired. You need to cap emissions and the cheapest way is with a CO2 market as opposed to an outright ban. This way the private sector will find the most cost-effective way to cut emissions. It’s not pretty – the Europeans show that – but it does drive down emissions like it or not.

Posted by Dave54 | Report as abusive

as well written as this article is, i still hold nader responsible for allowing bush2 to be appointed pres in 2000, causing far more damage to the usa i suspect than global warming has.

Posted by jcfl | Report as abusive

So, according to some posting here –

#1: It’s GOOD for corporations to make money, but it’s NOT GOOD for Al Gore to make money. I’m confused by that logic.

#2: If it’s cheap, then it’s right. Anything that costs me money is wrong.

#3: If I don’t understand it, it’s automatically a lie.

#4: If we can’t stop other countries from doing something bad, then we shouldn’t stop doing it either.

#5: If the Earth creates CO2 naturally, then we should, too, even if we’re making inordinate demands on the planet’s ability to balance the atmosphere.

I have news for everyone, we aren’t trying to “Save The Planet”. The planet will be here and repair itself no matter what we do it. What we’re really trying to save is ourselves.

Posted by JL4 | Report as abusive

We’ve reduced emissions more than the European Union because of the switch to natural gas from Coal. A carbon tax gives less incentive to switch to natural gas from coal as it cuts back the return on investment.

Posted by DHGIII | Report as abusive

I do not think that mankind’s impact on the earth is as great as some people have been led to believe. Some impact, yes, especially on a local (cities) and even regional basis; but globally the impact has been minimal. There are two reasons I feel this way. One is that natures impact on itself is far greater than mankind’s impact could ever be. How much bigger? In my view it has to do with energy – energy thrown at the earth, and energy created on the earth. It is only with the release of energy that by products (pollution if it is man made) are created. Without energy from the sun or the creation of energy on the earth, our earth would like the planet pluto – dead. The reality is that the sun throws the same amount of energy at the earth in an hour or two that mankind creates in a year. So in essence the sun’s impact on the earth is about 5,000 times greater than man’s impact. The impact of the sun is enormous. Just think about a single hurricane. Virtually all of it’s energy is the result of the sun. The second reason I do not think that man’s impact is all that great are the natural long term weather cycles that the earth is subject to. The present warming of our planet has been going on now since around 1400 AD. And then there are the ice ages. From what I understand, the earth cooled about 6 degrees during the ice ages. The scary part about that is that no one really has a good explanation as to why. But the ice ages did happen. I live in the eastern part of the state of Washington, and the geologic evidence here for the ice ages is obvious and undeniable. Want a more recent natural impact? Read about Tambora in 1816, the year without summer. It may seem a little trite to say so, but the natural processes of nature here on earth are like an enormous washing machine, and what will be will be. Nature is far too big for us to control – or to have much affect.

Posted by 123456951 | Report as abusive

JL4 above has it right, almost.

Sure, we’re all trying to save ourselves first. That’s natural, and obvious. However, it does make sense to reduce carbon emissions, if only to help ensure we keep on trying to save ourselves. Simply look at recent pix from some Chinese cities to see how they’ve affected local pollution, with no end in sight.

Excess of anything is a danger. Excessive CO2 and related pollutants should be reduced/removed when lives are in danger through increased health risks. Nobody complains about the cost to remove/isolate nuclear contamination.

CO2 is more pervasive, just as invisible and just as deadly over the long term. Forget about climate change and global warming: just concentrate on getting CO2 back to its stable point of 3% of global gases.

All else is distraction.

Posted by mayapan1942 | Report as abusive