Will the promise of carbon tax revenue motivate a GOP Congress

Will the promise of carbon tax revenue motivate a GOP Congress

Last week I had a visit from Mark Gould, Group Leader of the Charleston SC Chapter of Citizens’ Climate Lobby, “a non-profit, non-partisan, grassroots advocacy organization focused on national policies to address climate change.” Joining us was Caleb Pennington, a University of South Carolina student, who is starting a Citizens’ Climate Lobby (CCL) on his campus.

The principle goal of the CCL is to advocate for a Carbon Fee and Dividend to reduce carbon pollution that is driving climate change and all its negative consequences. And do so in a way that will generate support from across the political spectrum and reveal the true cost of carbon-based energies.

To internalize the social cost of carbon we propose an initial fee of $15/ton on the CO2 content of fossil fuels, escalating $10/ton/year, imposed upstream at their point of extraction and collected upon entry into the economy.

Accounting for the true cost of carbon-based fuels not only creates a level-playing field for all sources of energy, but also informs consumers of the true cost-comparison of various fuels when making purchase decisions.

100% of the revenue from the carbon fee is held in a Carbon Fees Trust fund and returned directly to households as a monthly dividend.

The vast majority of households will receive more than they will pay for increased energy costs. This feature will inject billions into the economy, protect family budgets, free households to make independent choices about their energy usage, spur innovation and build aggregate demand for low-carbon products at the consumer level.

The idea of making the cost of producing energy or any product that pollutes the environment include the cost of protecting our air, water and earth is not new. In 1970 in his State of the Union address, President Richard Nixon said:

We can no longer afford to consider air and water common property, free to be abused by anyone without regard to the consequences. Instead, we should begin now to treat them as scarce resources . . . This requires comprehensive new regulations. It also requires that, to the extent possible, the price of goods should be made to include the costs of producing and disposing of them without damage to the environment. (cited in “The Influence Machine” by Alyssa Katz)

This Nixonian goal is also championed more recently by another Republican, former South Carolina Congressman Bob Inglis, who lost his seat in 2010 partially due to his belief in climate change and a new energy future. Inglis believes that a carbon tax is the free market solution to the problem of climate change.

It is the most efficient way to deal with our energy and climate challenge, to solve the climate problem, but to also unleash additional energy. Some people like to give you the impression that we need to do with less, but we want to do with more — more mobility, more convenience, more freedom with energy — and we think that can come if free enterprise is the means of solving the challenge. If the challenge is solved by government regulation, it is inherently evadable and would be a real mess. But if this is solved by free enterprise, there is going to be innovation that brings faster, better, cheaper energy.

There is a role for government. It is simply being the honest cop on the beat that says to all fuels that you have to “own your own costs” so that the market can judge your product. We should eliminate all the subsidies. No more Solyndras. No more production tax credits for wind. No more credits for electric vehicles. No more special tax provisions for oil and gas. Level the playing field.

Like CCL Inglis believes that any carbon tax or fee should be revenue neutral by being returned to the consumer. Inglis favors an income tax cut while CCL favors a dividend check of the same value to every citizen. Both systems have their drawbacks.

The tax cut would benefit higher income Americans more than lower income workers. An equal dividend check would be unfair to the worker who has to pay more for gas to drive 20 miles to a job compared to the person who buys less gas because they work out of their home.

Then there are the other proposals from organizations like the American Sustainable Business Council (of which I am co-chair) that suggests a range of uses for the revenue collected from a carbon tax: “reducing income or payroll taxes; supporting communities heavily affected by the economic transition such as coal miners and coal-dependent communities; or improving the nation’s aging infrastructure.”

It would be nice if the only problem for implementing a carbon tax or fee was deciding how to use the revenue. But the reality is that the party in power in Congress still refuses to acknowledge that climate change is real and certainly doesn’t yet see the benefits of a carbon tax or fee.

We can only hope that Richard Nixon’s spirit of environmental protection and Bob Inglis’s free enterprise message takes root in our Republican Congress. What we do with the money will surely help motivate GOP members to be a part of the solution instead of part of the problem.

The voters will be watching.