Climate right for carbon tax
By SHELLEY BUONAIUTO
The year 2012 was the warmest on record for the U.S. Wildfires burned more than 9.3 million U.S. acres, and climate and weather disasters in 2012 cost the American economy more than $100 billion.
In June, President Barack Obama announced his Climate Action Plan, steps his administration would take to reduce greenhouse-gas emissions, such as Environmental Protection Agency regulations on new and existing power plants.
On September 18th the Energy and Power subcommittee of the House Energy and Commerce Committee will hold a hearing on the Obama administration’s climate-change policies and activities.
This is timely and overdue. This year, CO2 concentrations reached 400 parts per million (ppm). Before the Industrial Revolution, this number was 280 ppm. The last time CO2 concentrations were this high was 3 million to 5 million years ago when the earth was much warmer and the seas 60 feet higher.
The Intergovernmental Panel on Climate Change is about to release its fifth report, in which the certainty that humans are causing the earth to heat up has increased from 90 percent to 95 percent.
The World Bank reports that, given our current trajectory, we can expect 7 degrees Fahrenheit of warming by the end of the century, with catastrophic consequences for food production, water, supplies, sea-level rise and civil unrest. Concerned about climate change and its effect on impoverished nations, the agency announced this year that it would no longer fund coal fired power projects except in rare circumstances.
Despite the near unanimity among climate scientists that global warming is already occurring, there are still skeptics. Some argue that in the 1970s scientists thought we were heading into another ice age. The use of aerosols with chlorofluorocarbons (CFCs) had filled the atmosphere with particulates that reduced the greenhouse effect. By 1977, scientific opinion converged on global warming, not cooling, being the chief climate risk.
Another common argument is that current warming is part of a natural cycle. The difference is that in the natural cycle, CO2 lags behind the warming because it is mainly due to the Milankovitch orbital cycles. Now CO2 is leading the warming. Current warming is clearly not part of the natural cycle. Plus, cyclical warming occurs over tens of thousands of years, while current warming has taken 150.
While the majority of Americans now acknowledge that climate change is happening, many express concerns that actions to reduce fossil-fuel use would endanger the economy. The primary target of the Energy and Power hearing appears to be the proposed EPA regulation of coal plants. If the committee finds those regulations to be an unacceptable solution, there is a promising alternative solution gaining bipartisan support: a revenue-neutral carbon tax that gives proceeds back to the public.
When I spoke with Sen. John Boozman about this, he expressed the concern that the poor would be affected by rising energy prices. But if 75 percent to 100 percent of the dividends collected are redistributed to the public-preferably through equal payments to all households-many low-income households could break even or even make money from reducing energy use. Aggressive reductions in greenhouse gases could be achieved without damaging the economy, or growing government.
A number of conservatives are in favor of this market-based approach. George Shultz, former Secretary of State under Ronald Reagan, writes: “We have to have a system where all forms of energy bear their full costs … to me the most appealing way is a revenue-neutral carbon tax.” Shultz refers to the fact that the price of fossil fuels does not reflect the cost of damage done to society-health costs, security costs related to imported oil, extreme weather damage made worse from climate change.
Many economists believe that the market is the best vehicle for solving the climate problem. But the market fails when there’s a distortion in the price of something, such as with fossil fuels. A revenue-neutral carbon tax would adjust the price to account for those costs. As renewable energy like solar and wind becomes competitive with and eventually cheaper than coal, oil and gas, the economy will transition to clean energy and greater fuel efficiency, lowering greenhouse-gas emissions.
Rep. Steve Womack expressed concern that China and India would continue to pollute, limiting the effect of U.S. reductions in carbon emissions. This concern is answered by border-adjustment tariffs on imports from nations that don’t have equivalent carbon pricing. Rather than enrich the U.S. Treasury, other nations will want to implement their own carbon tax and keep that revenue within their borders.
The president has said all along he would prefer to have Congress enact a bipartisan, market-based solution on climate change. It will take a year or two for EPA regulations to be developed and implemented, enough time for Congress to deliver that “market-based solution” in the form of a revenue-neutral carbon tax that gives proceeds back to the public.
Shelley Buonaiuto is co-chairman of the Fayetteville Citizen’s Climate Lobby.