A Market-Based Carbon Tax That Even Conservatives could like
The following statement, “Take a market-based approach on climate change,” was prepared by the Citizens Climate Lobby, whose executive director, Mark Reynolds, delivered the keynote address at the 2012 Annual Peace Conference in Grand Island. For the past three years, Citizens Climate Lobby has been advocating a market-based tax on carbon called ‘fee and dividend’ that would incorporate the health, economic and environmental costs of burning fossil fuels. Nebraskans for Peace has formally endorsed the ‘fee-and-dividend’ proposal as our best political hope to start reining in greenhouse gas emissions. A revenue-neutral, market-based tax that is completely refunded to the public could actually attract bipartisan support.
President Obama has said he would prefer that Congress enact a market-based solution to the problem of climate change, but that hasn’t happened.
With time running out on our window of opportunity to contain global warming to manageable levels, the President has turned to the only option at his disposal—government regulation to curtail greenhouse gas emissions from new and existing power plants.
These regulations would be developed and implemented by the Environmental Protection Agency, which has done a stellar job of preserving the purity of America’s air and water. New rules will no doubt help to bring down emissions, but conservatives see this approach as an expansion of government bureaucracy, which they oppose.
These new regulations will also increase the cost of energy, placing an economic burden on American consumers.
So, what is the alternative? How can we reduce emissions without inflicting pain on households?
The answer is a steadily rising tax on carbon-based fuels that returns revenue to the public. This market-based solution is favored by a number a number of conservatives:
- Art Laffer, Reagan’s economic advisor
- Greg Mankiw, advisor to George W. Bush and Mitt Romney
- George Shultz, Secretary of State under Reagan
These conservatives embrace a revenue-neutral carbon tax because it makes fossil fuels pay for their true costs to society. It corrects the distortion in the free market that gives dirty energy an edge over clean technology. Once this distortion is corrected, the market will move away from fossil fuels and towards clean energy, reducing greenhouse gas emissions. Returning carbon tax revenue to households will enable Americans to make this transition without economic pain.
Conservatives in Congress looking for an alternative to more EPA regulations should consider the market-based approach of a revenue-neutral carbon tax.