A Conservative Plan on Climate
By Bob Inglis
You’re a conservative who thinks it’s time to offer a solution on energy and climate. You’re not alone.
Thousands of conservatives like you are ready to enter the competition of ideas, ready to change what we tax, ready to unleash the power of free enterprise. You might be motivated by the hope of tax reform or by the search for an alternative to EPA regulation of CO2 or the by dream of lighting up the world with distributed energy. Whatever your motivation, there’s a credible conservative movement waiting to be joined.
If your motivation is tax reform, you have many allies who are hoping that Rep. Dave Camp, R-Mich., and Sen. Max Baucus, D-Mont., will be successful in their attempts to overhaul the tax code. There are others who believe that Camp and Baucus will be successful when tax reform is combined with an overall plan to address our structural deficit. Either way, the opportunity is the same — to change what we tax.
The potential to unify conservatives on this point is huge. What conservative wouldn’t jump at the opportunity to un-tax income and tax almost anything else? If we were to start taxing carbon pollution, we could lighten up on the taxation of income. Art Laffer, President Ronald Reagan’s economics adviser, has called this kind of tax swap a “no brainer.”
Conservative economists point out that this sort of Pigovian tax swap (named after English economist Arthur Pigov, 1877-1959) should be set at the marginal harm caused by the carbon pollution — not higher, not lower. In this way polluters would be held accountable for the actual harm they’re causing, and their products would be accurately judged in the marketplace. Fuels shouldn’t be singled out for special shaming, nor should they be allowed to get away with socializing their costs while privatizing their profits.
It’s essential that any tax on carbon pollution be designed to avoid harm to the economy and to avoid an actual increase in global emissions. That’s why any carbon tax should be made border-adjustable so that the tax is rebated on exports and imposed on imports from countries without an equivalent tax on carbon.
If carbon is taxed only domestically, energy prices would rise here relative to countries without a price on carbon, production lines would be moved to those more energy-intensive countries and global emissions would actually rise. America would be the double loser.
This is where you can find common cause with conservatives who wish for something better than command-and-control regulation. Recently, the EPA announced proposed regulations for new power plants. Conservatives know that regulations are the worst possible way to attempt to curtail CO2 emissions. Litigation will be filed to block the implementation of the proposed rules. If the administration succeeds in that slog of litigation, it will have clumsily priced carbon via regulation but only domestically.
In the midst of the Great Recession, cultural norming has kept conservatives like you from speaking out in support of a tax swap. There’s been a fear of being cut off from the conservative community if one joins 97 percent of climate scientists in saying that climate change is real and human-caused. Cultural norming has cowed others into remaining silent about the health impacts of the soot that comes from old-style burning of fossil fuels. Even if the climate costs were zero, it would make sense to do a tax swap that un-taxes a good thing like income and puts a tax on particulate emissions.
Maybe you’ve noticed, though, that fewer and fewer conservatives are saying that climate change is hooey. Many have migrated into the camp of those who say that climate change is real, even if they’re not ready to say it’s human-caused.
And maybe you’ve noticed what happens when the subject of climate change comes up in a room-full of conservatives. Invariably, there’s a loud mouth or two who spout the “hooey” line. But when you look around the room you see the faces — of the young conservative who wants her party to be relevant to her future, of the hunter and the angler who know that things have changed, of the libertarian who passionately believes in accountable marketplaces and of the entrepreneur who sees dollar signs in consumer-driven energy innovation. Looking at those faces, you can be sure that you’re not alone.
Bob Inglis is a member of Citizens Climate Lobby’s Advisory Board.