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Cher Gilmore: Tax carbon, help the economy

Posted: June 16, 2014 2:00 a.m.
Updated: June 16, 2014 2:00 a.m.

For years, policy-makers have assumed that any program to address global warming by cutting carbon emissions would be a drag on the economy and cause massive job losses.

The issue has been repeatedly framed as an either-or choice: we can either improve the economy or save the environment.

Now a new study by Regional Economic Models Inc. has turned that notion on its head.

Regional Economic Models Inc. has provided economic impact analyses for private-sector clients as well as state and local governments, academic institutions and nonprofit research organizations for 34 years.

The REMI study found that a gradually increasing fee on carbon, with all revenues returned to households, would not only add millions of jobs, but also stimulate the economy.

More specifically, by 2025, we would add 2.2 million jobs, raise the gross domestic product by more than $80 billion annually, rebate a four-person family $3,480 per year, reduce carbon emissions by 33 percent, and save 13,000 lives a year due to improved air quality.

The study analyzed the economic impact of a gradually increasing fee or tax on the carbon content of fossil fuels, with all revenue returned to households.

The fee, assessed at the point of extraction or import, would start at $10 per ton of CO2 and increase by $10 per ton each year.

Border tariffs were factored in to keep the global playing field level for U.S. corporations. Revenue was divided into equal shares, with one share going to each adult and a half-share to each child, up to two children per household.

Returning the revenue to households would protect families from rising energy costs and ensure their support through the transition to renewable energy. That is important because popular support would be necessary to maintain the program long enough to achieve the needed reductions in greenhouse gas emissions.

The report shows emissions reductions would be at 52 percent of baseline by 2035 and 80 percent by mid-century.

This would keep us below the 2 degrees Celsius increase in warming that scientists say is the maximum we can safely tolerate.

British Columbia implemented a revenue-neutral carbon tax five years ago, and while per capita greenhouse gas emissions have decreased 9.9 percent, that province’s GDP has grown more than the rest of Canada’s, and 64 percent of the population supports the policy. The plan works.

If fear of economic pain has kept legislators from taking action to cut carbon emissions, the results of this study — along with British Columbia’s experience — should calm their nerves and motivate them to take another look at the carbon fee and dividend approach.

In the absence of such a solution, the Obama administration is proceeding with Environmental Protection Agency regulations to limit carbon pollution from coal-burning power plants.

Republicans in Congress are already lining up to block those rules, but the Supreme Court has issued repeated rulings recently that the EPA has both the authority and responsibility to regulate carbon as a pollutant.

Further challenges are unlikely to succeed.

There is already big-name support for the carbon fee approach in the conservative camp — for example, Former Secretary of State George Schultz and Greg Mankiw, economic advisor to President George W. Bush and presidential candidate Mitt Romney.

They argue that the price of fossil fuels does not reflect the health, security and environmental costs resulting from their use. If we fix this price distortion, the market will gravitate toward cleaner energy without the need for regulations or subsidies.

Failure to dramatically reduce the greenhouse gas emissions we pump into the atmosphere daily will have consequences that could exceed our capacity to adapt.

That is the conclusion of climate studies recently released by the Intergovernmental Panel on Climate Change and the National Climate Assessment.

If we do little or nothing, the reports say, we’ll experience more of the extreme weather events we’ve already seen, more diseases, more damaged infrastructure, more flooding and drought, and more food and water shortages, among many other unsettling consequences.

Inaction is no longer an option.

The good news is that this study changes the whole conversation around global warming and the ways to contain it. It shows there is no economic argument against a national fee and dividend program.

This plan creates jobs, grows the economy, saves lives and makes Americans richer. And it does all this while reducing carbon emissions enough to prevent catastrophic warming.

What politician could be against those results?

If Republicans — or Democrats — want to avoid the regulatory approach, they should get on board with this market-based, win-win solution.

Cher Gilmore is a member of Citizens’ Climate Lobby and lives in Santa Clarita.



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