O'BRIEN: Bipartisan climate change solution is already in existence
The climate change narrative pushed by the media is horribly wrong. No, the science is neither disputed nor “created by and for the Chinese in order to make U.S. manufacturing non-competitive,” as the leader of the free world once tweeted. Human carbon emissions are surely warming the planet, with catastrophic consequences for the world’s poorest people. But the potential solutions the media offers misrepresent the underlying economics and actually make a long-term, bipartisan climate plan less likely.
Americans are often presented with two options: either tax the economy into the ground to fund government-sponsored renewable energy investments or save jobs, continue on our current trajectory and pretend it’s no big deal. The truth is prominent economists from across our political divide have already reached a consensus on how to fight climate change efficiently and not leave Americans worse off financially. It’s an idea championed by leaders from Sen. Bernie Sanders (I-Vt.) and former President Barack Obama to Secretary of State Rex Tillerson and former Massachusetts Gov. Mitt Romney (R-Mass.) — a revenue-neutral carbon tax.
Carbon emissions have huge “negative externalities,” or costs to society not reflected in the price of oil, coal and natural gas. Emissions cause billions of dollars in health problems, harm to the environment and most importantly, create global warming. The rest of society, be it governments or consumers, pick up the tab for these impacts. As a result, emissions are supplied well beyond the optimal amount.
The solution to this is what economists call a Pigovian tax, which “internalizes” negative externalities, making polluters pay the true cost of what they emit. It’s the market-based solution to climate change, supported by liberal and conservative economists. A carbon tax would be more economically efficient than specific regulations imposed on polluters since it gives firms the ability to creatively reduce emissions, rather than use a technology or processes mandated by the government. At the same time, it would still be extremely effective in reducing emissions. According to a 2013 Energy Information Administration study, carbon emissions would be dramatically reduced over the next few decades with relatively small carbon taxes. The proposal put together by former Reagan administration Cabinet members George Shultz and James Baker (endorsed by Romney) calls for a $40 per ton tax that gradually rises over time. That is roughly in line with the EPA’s estimates of carbon emissions’ social costs.
This tax would obviously raise a massive amount of money for the federal government, but most proponents agree that the revenue should go right back to Americans through decreased taxes. This would offset the higher prices they pay as a result of the tax. Under the plan produced by Shultz and Baker, revenue would be evenly distributed to Americans, amounting to around $2,000 for a family of four. That would be a net gain for the bottom 70 percent of Americans, but it can be tinkered with to make everyone just as well off as they were before the tax. Proposals vary, with some using a portion of the revenue to lower corporate or payroll taxes. Whatever the decision, the idea is to dramatically reduce carbon emissions without leaving Americans worse off financially.
A carbon tax isn’t the only policy needed to effectively fight climate change since it would not cover all emissions. Methane, nitrogen oxides and others must be dealt with separately, probably through traditional regulations. The need to protect our communities, public lands and waterways from other types of pollution also remains as important as ever. But for carbon emissions, a per-ton tax makes much more sense than the current piecemeal policy. It’s also within reach if conservative Republicans in Congress are ready to stop denying the overwhelming scientific consensus behind climate change. It satisfies their need for a market-based solution while achieving the massive reductions in emissions liberals have been demanding.
The biggest obstacle has long been — and remains — our toxic politics. The disinformation campaign waged by people like the Koch brothers, who fund climate science-denying organizations around the world, is as strong as ever. They frame the choice as one between sky-high taxes to protect the environment and economic growth, which as a carbon tax shows, is a false one. As a result, many politicians must run on anti-science platforms or risk being devoured by false notions about climate policy spread by the media and special interests. If we can overcome this breakdown of reason and fact, we may actually be able to settle on a climate policy.
In the current divisive political environment, it seems as unlikely as ever that Democrats and Republicans can come together on anything, let alone a policy on the biggest issue facing humanity. But if there is any hope left, it runs through a carbon tax. Fortunately, this last resort compromise also happens to be the smartest policy available.
Connor O'Brien is a School of Arts and Sciences sophomore majoring in economics with a minor in history. His column, "Policy Over Politics," runs on alternate Thursdays.
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