What does a conservative carbon tax look like, anyway?

Greg Mankiw, Martin Feldstein, James Baker and Ted Halstead
of the Climate Leadership Council

“[T]here is mounting evidence of problems with the atmosphere that are growing too compelling to ignore. And, once again, there is uncertainty about what lies ahead. The extent to which climate change is due to man-made causes can be questioned. But the risks associated with future warming are so severe that they should be hedged.

The responsible and conservative response should be to take out an insurance policy.”

If you have not been paying attention to climate politics, you could easily assume these are the words of liberals.

Meanwhile, you could be forgiven for thinking that fierce opposition to a carbon tax in Washington State that would have allowed for a tax rebate of up to $1500 per family for low-income families would come from the GOP.

But if you have been paying attention to climate politics, you would know that my opening paragraph are the words of George Shultz and James Baker, III, both former Secretaries of State and Secretaries of the Treasury, and arch conservatives.   You would also know that the group that torpedoed a Washington State carbon tax designed to protect the poor was none other than the Sierra Club.

There are strange fractures in our polity, some of which are most unsuspected.

In this post, I am going to explore the most recent proposal for a carbon tax.  It is being proposed by the newly formed Climate Leadership Council (CLC), which consists of George Shultz, James Baker, Hank Paulson (George W. Bush’s Secretary of the Treasury), Greg Mankiw (conservative Harvard professor of economics) and other conservative luminaries.

What does a conservative climate policy look like?

1. It is a free market solution.  What does that mean?
It focuses on private action, not government decision.  There is an assumption that government is inefficient.  There is a basic belief that individuals and businesses will find the best ways to cut emissions in their daily lives and operations if they have the incentive to do so.  Governments won’t find the optimum means.

There is merit to this.  In the micromanagement of my day, no one knows better than I what challenges I face and what tools and techniques will best accomplish my goals.

Here is a simple example.  Only I know that I need to travel X amount of miles in a day, with longer trips a certain number of times per year.  Only I will know what particular EV will meet my needs best.  Why should a government entity be picking the cars that should get support?  I should be picking the car.

A price on carbon simply increases the cost of anything that includes carbon.  The decision about how to avoid that increased cost resides in the individual.  They call this a “market signal.”

The CLC proposes a $40-per-ton carbon tax.  (They are unclear about whether it would increase over time; their piece has a reference to the possibility of it rising). That would add about 36 cents to a gallon of gasoline.  Of course, it doesn’t impact only gasoline.  It would find its way into every item that requires the use of fossil fuels in its production or transport.

2. It is revenue neutral.  What does that mean?
It does not grow government.  Government keeps none of the money.  It is returned to individuals to spend as they see fit.  Of course, those spending decisions are now made in an environment in which there is a market signal away from carbon.  The Shultz proposal would provide a family of four with about $2000 per year. (This would increase if the tax increased annually up to $5000).  Seventy percent of Americans would get back more than they spend in the increased fee.

3. It has a border adjustment.  What is that?
A border adjustment is really two separate things at once.  First, any goods sold from here to countries without a comparable tax would get a rebate at the border so they could fairly compete.  Second, and more importantly to climate action, any goods brought in to the US from countries without a comparable price would have it imposed at the border.  This would create an incentive to those countries to implement a comparable price.  We could thereby push other countries to follow our lead.

Up to this point, the CLC proposal is very similar to that of Citizens’ Climate Lobby (CCL—yes, the acronyms are close, but no, these are NOT the same groups).  There is a small difference.  CCL starts at $15/ton per year and increases $10/ton per year.  It would add less cost, and have a commensurately smaller dividend in the first year, but then increase.  CLC, on the other hand, is vague on whether it would increase annually, but starts higher.  Both of these proposals differ a great deal more from Washington State’s proposal which was a carbon tax swap (cut sales taxes in equal measure to the carbon price collected).

But it is here, with the last point, that CLC differs so tremendously and shows its true appeal to the conservative base... and which progressives will likely abhor.  It may also be why these conservatives seem to think they have a chance of actually getting the policy implemented.

4. Eliminate regulations on carbon.  What regulations?
It would be used to justify the end of the Clean Power Plan (CPP) and federal and state liability for emitters.

Ending the Clean Power Plan is not in itself such a big deal.  The CPP is likely to die one way or another under the current administration, anyway.  Moreover, the CPP isn’t very aggressive; the markets are achieving just about everything the CPP was designed to do anyway.  Indeed, it is unlikely that eliminating regulations is much of a carrot to the right.  The CPP is dead to them already.

It is the liability for emitters that is the crux of this.  Currently, corporations like Exxon are facing the prospect of serious liability.  Lawsuits will be popping up.  It appears that the conservatives are hoping to get Exxon and other fossil fuel companies off the hook with the incentive of a carbon tax.

The question will be whether that is incentive enough.

My opinion?  It should be enough.

First, the carbon tax is powerful.  Studies demonstrate that a carbon tax will cut emissions effectively, reaching all points that carbon reaches within our economy and not just those we manage to think of and create regulations for.  It will reach agriculture, consumer goods, transport, electricity, heating…we will be creating shifts everywhere carbon can be found.  Moreover, a quarterly check cut to American families will make this climate policy nearly repeal proof.  Voters are very unlikely to support you if you vote to repeal their quarterly check of $500.  Once implemented, we can continue to build on it, but we are unlikely to lose it.  The border adjustment will push other nations to cut carbon as well.

But what about Exxon?  How can we let Rex Tillerson waltz into office and gain himself immunity for the truly horrific decisions that he and his company has made over the years?  Decisions that have condemned us all to at least 1.5C and likely much much worse?  What about those same greedy and truly evil decisions by those that KNEW all along just how bad it would be?  Rex Tillerson KNEW.  His scientists DID the studies.  They knew how much suffering their profits would cause.  How can we let such evil be?

What I am about to say is a hard pill to swallow.  I say it as a mother.  I say it as a fiancée, as a friend, as a teacher.  I say it because what I love is in harm’s way.

We. Are. Out. Of. Time. We MUST cut emissions. NOW.

We do not have the luxury of worrying about retribution.

The poor of the world, first and foremost, and then we all, will suffer much more by the arm of carbon emissions than that of oil executives gone unpunished.

Besides, once the real devastation comes, the will of the people, the thirst for retribution, will out.  Illegality is not likely to prevent it.

In the meantime, I'll take carbon cuts, now, thank you.

It will be interesting to see if the urgency of climate change has yet truly sunk in.  If it has, even the left, even Sierra Club, will agree.

Just How Bad Is It, Really? A Primer on Our Current Climate Crisis

Increasing numbers of people are coming to me to ask about climate change.  More and more, people are realizing that they must get informed and become civically engaged.  As they see the new administration and Congress looking to get rich on fossil fuels and see the Russian corruption issues linked to oil, they realize that climate change is now integral to the survival of our democracy.

Becoming informed on climate change, carbon emissions and energy policy is now imperative.  Thankfully, the questions are coming in.  At the base of every question is the implicit question, “just how bad is it, really?”

The news is not good.

Let's start with the basics.  1C, 1.5C and 2C warming.  What exactly does that all mean? That means, if you average together all the temperatures around the surface of the globe before 1880, and you compare them to the average global temperatures between 2006 and today, they are warmer today.  Depending on which years you choose (2000-2010, 2005-2015, 2006-2016), our current warming is about 1C or 1.8F.

In Paris, in December 2015, almost 200 nations agreed that we need to limit warming to under 2C and as close to 1.5C as possible.  Why?  Well, the scientists are pretty clear that beyond 1.5C warming means utter disruption and severe devastation.  Island nations disappear, coral reef ecosystems cease to be (and the food that they provide for millions of people), extreme weather intensifies, water supplies disappear for many people, food crop yields drop.  We begin to see impacts that will themselves certainly bring greater warming (called positive feedbacks).

That warming is the result of the greenhouse gases put into the atmosphere up until about 40 years ago.  Keep in mind that greenhouse gases do not make heat.  They trap it like a blanket.  When you are cold in the winter, and you put a blanket on, it takes a while for the heat you are producing to build up, trapped by the blanket, to make you feel warm.  The same is true with global warming, except the heat source is the sun.  We are on a delay and will continue to warm even if we stop burning fossil fuels today.  That’s right.  If we put not one more carbon atom into the atmosphere, we will still warm for another 40 years.  We have "locked in" at least 1.5C warming (2.7F).

That makes it sound like we need to stop burning fossil fuels today, yet people continue to use fossil fuels.  Even James Hansen, who arguably understands the urgency as well as anyone on the planet, is using fossil fuels.  Why do people who get the urgency keep saying, we have to cut emissions to zero by 2050?  Why not by tomorrow?

What gives?

Well, here is where the sociopolitical realities meet the physical realities.  The latter is immutable.  The former?  Only stubbornly slowly mutable. 

No one is going to turn off the energy.  This isn't some demonstration of humanity's evil side.  Our technologies are things we rightly think should be accessible to the poor, who do not yet have it.  We don't see energy as an evil luxury of wealthy nations that the poorest are noble to go without.  Just consider hospitals and refrigeration alone.  These are not evil things.  And no politician is willing to tell a populace that they must go without them.  I would say, understandably.  Just the simplest example:  we travel to our jobs, where we earn money to care for our children, those same children we are endangering with warming.

The very values that would make us cut emissions are often the very values that drive us to continue to use fossil fuels.  

Here is the beautiful thing:  we can continue to use energy without causing warming.  Everyone should, at this point, agree that is what we need to do.  Continue to refrigerate, heat, cool, drive, but without carbon emissions.

We have the technology to decarbonize our energy systems.  The tools we have available for electricity are solar, wind, hydro, geothermal, nuclear.  Transport, home heating and cooling, and much of our industry can convert to electricity.  Agriculture can be done in a way that minimizes fertilizers and reduces meat consumption.  Almost all industry can be carbon free.  (There are some exceptions, and R&D into things like cement, a source of high carbon emissions, are essential).

We have the technology and means to cut almost to zero emissions now without halting all modern civilization.

Turning off technology is not an answer anyone can or will choose.  But decarbonization is.

BUT here is the thorny part.  We can't just turn off gas, oil and coal tonight and wake tomorrow and turn on solar, wind, hydro, geothermal and nuclear.  We can't just park our internal combustion engine cars tonight and drive off in EVs tomorrow.

It takes time and money to build the required infrastructure.  That's right.  This is basically a question of time and money.

We might have built the infrastructure in the US necessary to avoid 2C or even 1.5C under a Clinton administration.  The Trump administration, and the current GOP Congress do not intend to build the infrastructure necessary to avoid 2C.  On the contrary, the current GOP seems hell bent on accelerating warming (They are so committed that their first priority upon gaining the White House was to remove mention of climate change from the website within minutes of Trump's swearing in). They are driving more drilling, mining and fracking by building more fossil fuel infrastructure:  pipelines, compressor stations and oil rigs.  Each investment into fossil fuel infrastructure is a commitment to decades of fossil fuels or abandonment of assets.  But even more, it is a failure to seize the market opportunities the rest of the world is seizing.

No.  We must stop building new infrastructure to which we then commit for decades and start building clean energy infrastructure we need to run our modern lives.

Fortunately, while the Trump/Bannon administration and the GOP leadership appear determined to profit from oil and coal, we have allies around the world.  Other nations, like China, India and EU members (most recently Sweden) have signaled an intention to make dramatic cuts in their emissions.  In addition, many states, including New York and California, in the US have signaled a similar intention, as well as cities.  Perhaps most encouraging of all, the markets are clearly transitioning to carbon free energy and will do so even without concerted government action (though not quickly enough to avoid 2C warming on its own).  Yes, climate action is actually profitable and an economic winner.

It must be our aim to join them and to stimulate carbon free energy in every way we can, individually, locally, at the state and regional levels and internationally while blocking the GOP from driving further burning, drilling and fracking.  

As we resist the assault on our democracy, we must recognize the assault may close the door on our chance to avoid 2C warming.  We are not only fighting for government by and for the people.  We are also fighting for energy policy by and for the people, as well as all living things.  We do so with the support of the larger community of nations.