Commentary

Barry Lawson: Conservatives’ carbon dividend plan merits consideration

Editor’s note: This commentary is by Barry Lawson, who is president of Barry Lawson Associates, a consultancy that does environmental mediation and strategic planning. He was project manager for the publication of Where The Great River Rises, an atlas of the Connecticut River Watershed in New Hampshire and Vermont. He lives in Peacham with his wife Lynne.

The worldwide movement toward renewable energy sources (renewables) is thriving. Renewables make sense for many reasons: long-term sustainability; decent returns on investments; an antidote to polluting carbon emissions (recognized by most people and nations as a major culprit in global warming); and clean air for people living in highly polluted regions. Fossil fuels will be with us for some time, even the staunchest of environmentalists admit; however, the future, no matter what fossil fuel advocates might wish or say, is in renewable energy sources like solar and wind.

Finding a politically and economically acceptable strategy for the transition from fossil fuels to renewables is a challenge, but most people agree that it must be done. According to a 2016 Gallup poll, 64 percent of Americans worried about global warming either a great deal or a fair amount. This is the highest percentage in the past eight years; and in no year in the last 26 has that percentage been less than 50 percent — it has been as high as 72 percent. Moreover, 59 percent of Americans believe that the effects of global warming are already apparent. This percentage has increased every year for the past six years. Only 10 percent of the population are outright deniers, claiming that we will never see the effects of global warming. Most Americans, it seems, do not believe that global warming is a hoax.

In response to the commitment taken on by most countries of the world to systemically reduce carbon emissions for critical health and environmental reasons, the Obama administration introduced a Climate Action Plan in 2013 to help the United States make progress on climate oriented goals in the coming years. These goals include protecting our seacoasts and vital public infrastructure along the coasts, and working cooperatively with other nations. Its approach, currently under attack by the new administration, depends on regulations for cutting carbon emissions. Opponents of the plan characterize these regulations as more government interference. OK, there is an approach that addresses this concern.

But we are all waiting to see what the administration’s energy policy will be and whether it will acknowledge climate change and embrace creative solutions.

 

The Climate Leadership Council (CLC) is a non-partisan research and advocacy organization whose mission is to rally global opinion leaders around a climate solution based on so-called carbon dividends. Ted Halstead, CEO of the CLC, says, “The only successful path to repealing a major program is by replacing it with something better. For now, the Trump administration is pursuing a repeal-only climate strategy. We (CLC) are offering the GOP a replacement program that is an insurance policy for our climate, that would be considerably more effective than the Obama-era climate regulations it would replace, and is an economic support program for America’s struggling working class. Embracing carbon dividends could be a strategic bonanza for the GOP.”

In a nutshell the CLC plan calls for a gradually increasing, revenue-neutral tax on carbon dioxide emissions, to be implemented at the refinery or the first point where fossil fuels enter the economy, meaning the mine, well or port. Because the imposed tax will be passed along to consumers, all proceeds from the tax will be rebated to the American people on an equal and quarterly basis via dividend checks, direct deposits or contributions to their individual retirement accounts (estimated to be about $2,000 per family of four in the first year, assuming a tax of $40 per ton of carbon emitted). Necessarily, border order adjustments will be used to protect American competitiveness by taxing imports from, and rebating taxes paid by companies exporting to, non-complying nations. The result of the above will permit a significant rollback of regulations that will no longer be necessary once a meaningful carbon tax is in place.

Those interested in the details of the plan are directed to the CLC’s website.

Among the plan’s supporters are former secretaries of state James A. Baker III and George P. Shultz; two former chairmen of the Council of Economic Advisers, Martin S. Feldstein and N. Gregory Mankiw; and former Treasury Secretary Henry M. Paulson Jr.

The CLC presented its plan to the new administration and got an initial favorable reaction. But we are all waiting to see what the administration’s energy policy will be and whether it will acknowledge climate change and embrace creative solutions.

In light of new legislative proposals in Vermont for a carbon tax, Northeast Vermont On Guard, an activist group of which I am a founder, believes strongly that the CLC’s carbon dividends plan should be carefully considered by liberals and conservatives, who favor market-based incentives over regulatory sticks. Here is a unique opportunity to show the world that America can govern responsibly and develop sound policy in a bipartisan manner.

It makes sense to give such an approach a full airing. We are not alone. The Financial Times, Barron’s Bloomberg, New York Times, Dallas Morning News, Chicago Tribune, and Washington Post, among others, have extolled the carbon dividend concept. In this current environment of partisan politics, demagoguery and challenging coalition building, CLC’s carbon dividend proposal deserves to be on the debate table. Its positive approach would indeed be a breath of fresh air.


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  • Adam Maxwell

    Great post! We have the opportunity to put checks in mailboxes and reduce carbon pollution right here in Vermont. Much thanks to Diana Gonzalez for showing that a fee and dividend approach to carbon pricing is truly a nonpartisan approach (she’s a lefty from Winooski).

    • Matt Young

      Brought to you by big wind

  • DougHoffer

    I am interested in the details so I visited the CLC site. I was particularly interested in the proposed dividend, which the proponents say would be “equal.”

    “Distributional studies show that a majority of Americans – including the bottom three income quintiles – would come out ahead. The reason is simple: the wealthier tend to pollute more, and would therefore face higher costs.”

    I would like to see those distributional studies. Also,

    “This policy is also equitable in another way: since costs increase in direct proportion to one’s carbon footprint and all citizens receive identical dividends, everyone is rewarded equally for reducing their carbon footprint.”

    Reducing one’s carbon footprint can be a challenge for renters who have no control over the building envelope, HVAC equipment, or fuel type. And it’s a challenge for those who live in rural areas and must travel some distance for work. And of course it’s a challenge for low-income folks with older less-efficient cars who can’t afford a more efficient vehicle.

    So while I’m open-minded, I need to see the analysis behind the assertion that low-income folks “would come out ahead.”

    • bill_christian

      Statistically, there’s no doubt that low income folks would come out ahead. The wealthy definitely use more fossil fuel, and it will be distributed equally. But that will not be true for all. Not for wealthy people who’ve chosen NOT to use much, through investment and/or lifestyle choice (not a lot of people, I believe). And not for lower income person who is kind of stuck using a lot. But we can’t save the climate and allow everyone to continue as-is. A carbon tax is the fairest and most effective way to do it. If it’s very hard on a few, we can do things to help them. That is what it takes, to succeed. To continue as we are is not an option.

      • DougHoffer

        “Statistically, there’s no doubt that low income folks would come out ahead.”

        Statistics won’t help renters and rural residents. You ignored my question.

        “If it’s very hard on a few, we can do things to help them.”

        There is no evidence that this plan will do that. There’s no doubt we need a carbon tax. The issue is how the revenue is distributed. A flat “dividend” raises a bunch of questions not addressed here.

  • Tom Hughes

    The Conservative Case for Carbon Dividends is well worth a read and a conversation. I agree with the introduction:

    “Mounting evidence of climate change is growing too strong to ignore. While the extent to which climate change is due to man-made causes can be questioned, the risks associated with future warming are too big and should be hedged. At least we need an insurance policy. For too long, many Republicans have looked the other way, forfeiting
    the policy initiative to those who favor growth-inhibiting command-and-control regulations, and fostering a needless climate divide between the GOP and the scientific, business, military, religious, civic and international mainstream.”

    Thanks for sharing.

    https://www.clcouncil.org/wp-content/uploads/2017/02/TheConservativeCaseforCarbonDividends.pdf

  • Adam Maxwell

    A fee and dividend approach has worked in other places around the world and there’s no reason our elected officials and state agencies can’t figure out how to learn from and improve upon these models. Technology is rapidly changing and by putting a gradually increasing fee on carbon pollution we have the opportunity to ween ourselves off a destructive product and make Vermonters whole while they participate in an energy revolution. It’s just sound forward thinking policy.

  • Matt Young

    Income/asset redistribution in a pretty bad disguise.

    • JohnGreenberg

      What tax doesn’t redistribute income or assets?

      • Matt Young

        Yes and many hide behind the ever popular safety and environmental disguises

        • JohnGreenberg

          I don’t understand your reply, but I don’t think you answered my question. Please specify taxes which do not redistribute assets or income.

          If they all do, what is the “disguise” you’re talking about?

          • Matt Young

            Perhaps you don’t understand the difference between my tax money going to build a bridge and money going from my mailbox to yours.

          • JohnGreenberg

            WHERE tax money goes has nothing to do with how it’s raised. Taxes, by definition, take money from someone to do something which, in most cases, that individual would not or could not do by himself. Whether it’s buidling a bridge OR sending a check to someone else. Consequently, taxes “redistribute” money whether they’re based on income, consumption (sales), property), specialized consumption (gas, carbon tax, alcohol, cigarettes).

            Again, please provide an example of a tax which does not “redistribute” income or assets. You’ve failed to do so thus far. Blaming me won’t help your case.

          • Matt Young

            What case? What are you trying to argue? Am I supposed to send you some money?