Voters must call for carbon tax plus rebates
Bipartisanship in the U.S. Congress seems like a quaint subject found only in history books, but it got an unexpected shot in the arm in the waning days of 2018 on one divisive issue.
Both the U.S. House and Senate took steps to bridge the partisan gap on addressing human-caused climate change. Oregon's congressional delegation should act now to support this effort.
The Energy Innovation and Carbon Dividend Act proposes a revenue-neutral carbon tax that returns all proceeds back to American households. The tax would be applied wherever fossil fuels enter the U.S. economy. It would start small, but rise steadily over 20 years. Such a tax would fill in the great missing piece of the carbon dioxide emissions debate.
At present, fossil fuel users pay nothing for altering the Earth's climate. When something is free, industries and consumers tend to use a lot of it. Without a price on carbon, government regulation becomes the only alternative to curb CO2 emissions. Most of the climate change controversy is simply a rehash of traditional left-vs.-right mud-wrestling over the role of regulation in the economy. And it gets us nowhere.
The bill proposes a simple solution to this intractable debate: There are no regulations. Instead it relies on accountability and the power of the free market. The hidden costs of burning fossil fuels would become evident in their price.
The more expensive something becomes, the more likely it will be replaced by lower-cost alternatives. Electric cars, buses and trucks will become more attractive when the cost of gasoline inexorably climbs. When fuel costs for coal and natural gas power plants rise, solar, wind and nuclear power make economic sense without requiring costly subsidies.
Fossil fuels are used in an incredibly broad range of industries, but non-CO2-emitting options often are available. These alternatives have not found widespread acceptance because they can't compete against cheap fossil fuels that don't pay their own way.
In France, "yellow-vesters" recently rioted to protest the imposition of a new gasoline tax. That French program offered nothing to families and farmers facing higher fuel bills.
By contrast, the most striking feature of the proposed bill in Congress is that virtually all of the money raised by the carbon tax would be returned directly to American families. Two-thirds of households will get more back from that monthly dividend check than they would pay out in higher costs for fossil-fuel-based products. And the most economically vulnerable citizens would benefit the most.
American industry and jobs will benefit by a third key provision of this bill: A tariff equal to the carbon content of that good would be levied on imports from any nation lacking an equivalent tax.
For example, if China has no equivalent carbon tax, Chinese steel imports would be taxed by an amount proportional to the CO2 released in its manufacture. And the proceeds from that tax would be added to the pot distributed to American families.
Last week, 45 eminent economists signed a letter to the Wall Street Journal calling for a national revenue-neutral carbon tax like this one. They included 27 Nobel laureates, all four former chairmen of the Federal Reserve, and 15 past chairs of the President's Council of Economic Advisors. Oil companies like Exxon and BP also have publicly endorsed such a tax because they greatly prefer its simplicity over costly regulations.
Oregon Sens. Ron Wyden and Jeff Merkley and Reps. Earl Blumenauer and Suzanne Bonamici have long called for legislation to address human-caused climate change. This bill is their chance to act and bridge Congress' partisan divide. But politicians won't act unless their constituents tell them that this issue matters to them. Oregon voters should let their representatives know that this bill deserves their full support.