The best solution for climate change is a carbon tax

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


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I see Nader is still an American hating communist.

Posted by americanguy | Report as abusive

How so?

Posted by DavidFleming | Report as abusive

Great article, Ralph! As a financial economist who has studied incentives and the public interest (my cv:, I agree that a carbon tax is the best way to deal with global climate change.

Posted by MarkLatham | Report as abusive

Ralph Nader continues to be America’s and the world’s greatest citizen.

Posted by cpsi | Report as abusive

Such a good news – as USA de facto killed off it’s nuclear energy sector, it leads to idea that if all the americans will became Amishes (despite 4/5 dying in process), planet will be such a better place!

Of course unholy people like russians, chinese and french will still be building abominations like factories, trains, planes, reactors and spaceships, but any sane pro-earth american will know that manual labor and walking for them and accounting and horses for rich (and government) is how Lord wants it to be.

And fact that current climate is still colder than in time of Richard Lionheart (not to mention Shumers or ancient Egyptians) proves absolutely nothing.

Posted by chyron | Report as abusive

Now that Larry, Moe and Curly have commented…..Fart joke and all!

Posted by wjkolar | Report as abusive

Mr. Nader has been a great advocate for the safety of Americans and his ideas are often of great value. This is one exception. Moving to high speed rail, better buses, more efficient cars using other technologies and innovative travel methods instead of using taxation as a catch all solution are more appropriate economic answers.

Posted by Witter | Report as abusive

I see denialists like americanguy, tmc, and chyron still infest the blogosphere. If you don’t have anything intelligent to say, why don’t you keep it to yourself?

We (all humans) are in a horrible situation with too many people, resources running short, and global warming happening as a result of our industrial activities. Glib and stupid statements that are not reality based have no place in the policy dialogue and should be ignored.

Posted by WhySoMuchBile | Report as abusive

Witter–Building a more efficient transit system and using a carbon tax to shift our energy system away from fossil fuels are not mutually exclusive actions. We have to both mitigate (reduce burning of carbon) and adapt (because we’ve already put ourselves on the path of significant warming, no matter what we do or don’t do).

Posted by WhySoMuchBile | Report as abusive

Thank you, Ralph, for pressing this crucial issue. I wish you had included some data on the large methane release accompanying the fracking process, considering that methane produces a much greater greenhouse effect than CO2.

Posted by bcrawf | Report as abusive

Science please Mr Nader to back your claims……

Some facts to ponder… GHG’s you mention are less than 5% of GHG’s…. water vapor (clouds) accounts for 95% and help trap heat on the earth, without them doing this we all freeze.

The atmosphere is 78% nitrogen, 18% oxygen, 1% hydrogen, etc with carbon around 0.50%….

The CO2 emission tonnages seem ok, the point being that these are a drop in the bucket compared to natural bio-degradation from plants/animals, volcanic activity and the major influence the oceans….

The issue being how would a carbon tax control ocean emissions etc and reduce global warming by 2-3 degrees Celsius….. the short answer it can’t be done…

Here is an important fact…. to grow a ton of tree you need a ton of carbon…. to grow our crops we need CO2..when mixed with water (H2O)and light we end up with protiens, sugars, carbohydrates, oils from with we feed the world…. if we were to sequester carbon at the rates some suggest we wouldn’t have enough carbon to feed ourselves.

CO2 is not the enemy, the enemy is those who fail to do their research (the media, politicians, regulators and those unprofessional scientists taking public funds for their own purposes). A carbon tax has no potential to influence mother nature.

Posted by Peggreen | Report as abusive

I’ve been a supporter of Nader on real political issues in the past but this is an area where we couldn’t be further apart. Over the years Global warming has been elevated to the status of a religious crusade with the cult of true believers espousing their belief based solely on blind faith. Like most evangelistic causes, even the disclosures of corrupt activity and false claims made by those who choose to call themselves the holders of the environmental tablets are rejected as tricks by an ever present pollution devil. Fortunately for the rest of us the true intent of this group was made crystal clear when Carbon Credits were first proposed by Tricky Al Gore, the accredited ring master of this circus. As usual, the U.S. Press refused to print the news of Mr. Gore’s association with a British law firm, that bears his name, who were setting up a market for Carbon Credits in Europe with future plans for this country. Considering the outcome of Mr. Gore’s recent business venture Current TV that was just sold to Al Jazeera at a bargain basement price, I think were safe for the near future. Once again the Capitalist profit motive surfaced as the savior of humanity, we’ll sell the right to pollute the environment to the corporate evil doers and that will ultimately make them stop. Hands up, who really thinks that they won’t pass this cost of doing business down the chain to the consumer, $6.00 a gallon gasoline and doubling of electric rates anyone in an environment of exported living wage jobs, massive unemployment, non-existent benefits, and falling salaries !

Posted by RLTMLT | Report as abusive

Mr Nader…few like to pay insurance for something intangible.

Hence, I think a better analogy than the insurance angle is to simply regard too much CO2 as garbage which we all produce – beginning with the CO2 everybody expels when breathing. Even tmc, above, deserves a nod.

So, add in all the CO2 produce by everybody with autos, machinery, BBQ fires etc, and I’m sure that all of us produce an indecent amount of CO2 – garbage, in effect.

Well, for a century of more, we’ve all been happy to pay for garbage collection at the end of the driveway. And, we all know what happens when garbage collection ceases from time to time – industrial action, strikes etc – with the threat of sickness and disease.

Is there anybody who wants to give up paying for driveway garbage collection each week? I guess not.

In the same way, all should be prepared to divvy up a few cents each week to pay for CO2 reduction.

Posted by mayapan1942 | Report as abusive

Imagine that, a government organization advocating for another tax. It must be nice to make a living off of the robbery of the world. Just keep burying all that nuclear waste and concentrate on what the real pressing issue is, robbing 350 million people to curb the effects of the other 7 billion on the planet. Sure, we can offset China’s pollution with a tax! It’s so simple!

Posted by LysanderTucker | Report as abusive

Problem is that _maybe_ (see Lionheart/Shumer era moment) that’s a right question but this is definitely funny answer.

Powerplant and busyness taxation will only bring even more american industries toward final relocation to asia or downright death (as long as there’s current “global free trade”/WTO, w/o which USA will go bankrupt long before even beginning to address energy/eco problems). Repressive gas tax to force people use public transportation would yield better effect, restriction on power consumption by household (inc. “passive” – in form of counting energy/carbon footprint of consumer devices and goods) would also help. But this will be eco-dictature of course.

With radiophobia (“nuclear-phobia”) which already deformed your energy system so much that no sane amount of solar panels or wind turbines can suffice , there’ll be energy deficit in america at the beginning of next decade already ( when oldest nuclear stations should be decomissioned).
And “alternative energy sources” will bring problems to the grid that were unheard of with classical centralized powerplants, not to mention that currently wind turbines and solar panels generally are losing proposition in energy balance (energy to do them vs energy generated per their lifetime in most places is not so positive, of course there’s some places where balance will be positive but such places are not so common as some people think, for ex. there’s already practically no unexploited places for hydropower stations in developed countres)

Posted by chyron | Report as abusive

chyron: The reality is that the current gross consumption of energy is not sustainable. First, because the externalities (impacts, global warming) from burning all the fossil fuels will destroy the environment’s ability to sustain us. I.e., current levels of consumption are not sustainable. Second, the EROI cost of fossil fuels can go no where but up (i.e., it takes more and more energy to produce usable energy, eventually leading to an inability to produce further energy). That’s the most important aspect of peak oil.

So, our choices: Drive off the eco cliff (that’s both economy and ecology) by not addressing the issue (deniers’ choice); institute “eco-dictature”; or voluntarily curb consumption of energy that emits carbon.

A universal and ramping up carbon tax would push us toward the least obnoxious of the three and is the only governance mechanism I can think of that might avoid the cliff and preserve some democracy at the same time.

Posted by WhySoMuchBile | Report as abusive

Mr. Nader while it must felt good to come to such enlightenment in the comfort of your home sipping on your skinny espressos without the cumbersome worries of the real world, but I hate to drag you down from your high horse and walk a mile in common folk’s shoes down the Common Sense blvd.

It’s not hard to chum out projection and good ideas from mount Olympus but at what cost? How much more must average America citizen suffer from this type of thoughtless, impractical academic theory crafting that had been dotted with the bodies of America middle class?

#1 If Carbon tax were ever to be put into law, there’ll be exceptions and loopholes that gets bundles into the thousands page bill, and worded in such matter that only the few big corps and super rich can utilize it. It’s proven fact time after time from our tax code to the recent health care reform.

#2 If by some odd chance big Corps are being taxed for carbon, what do you think they going to do? A) Pass it on to the end users id consumer, B) Move their business elsewhere in the world, or C) both?

#3 Do we serious need more bureaucracies to tax Americans…brilliant! What are the chance that the supposed tax is going to improve our environment or it’s going to be funnel into special interest groups, pet projects and to consultants that hires consultants to figure out how to complicate simplest things.

I can easily name few more but I don’t think it’s necessary.

Posted by FishingatLarge | Report as abusive

Lets put a carbon tax on all imports from countries that do not meet our current EPA standards…otherwise US jobs will go to third world countries even faster than they do now.
Or here is one for you, lets put an ‘elite tax’ on those morons on the far left and the far right that come up with and push for stupid ideas like a ‘carbon tax’.

We need to be good stewards for our children’s future but ideas like a carbon tax are just plain bad.
Here is an idea that we lived by in the past…..lets honestly educate our people to the facts and let them make their own decisions .

Posted by Gen | Report as abusive

Doesn’t Nader know this fraud against the very building block of life is dying its overdue death . More than an 8% increase in CO2 over the last decade and a half has caused no change in observed mean temperature . It’s only effect is the proven greening of the planet . The watermelons are the most destructive force for both human and planetary welfare since the fall of traditional marxism .

Posted by BobArmstrong | Report as abusive

Earth is doing exactly what it has for eons. The only difference today is there are legions of scam artists lining up to fleece the legions of suckers.

Posted by sjfella | 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

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 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