The best solution for climate change is a carbon tax
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