Traverse City Record-Eagle

Archive: Sunday

April 28, 2013

Forum: Time for carbon tax on energy producers

America is finally facing the reality of the climate crisis. According to a recent Gallup poll, 58 percent of Americans are worried about climate change. The insurance industry, the Catholic Church, and many groups in between have issued a call to action. While it is too bad that it has taken destructive storms, crop-killing droughts, wildfires and floods, the good news is that we are turning toward solutions.

In conversations across the political spectrum, a carbon tax is the solution that is rising to the forefront. Economists, environmentalists and business leaders support a revenue-neutral tax on carbon as a win-win solution to the climate crisis.

Here’s how it works. The energy producers are charged a fee for the amount of CO2 pollution that will be produced by their fossil fuels. The fee is assessed at the source of entry (the mine, the well, the port). This money is passed on equally to citizens as a dividend (monthly check), to offset the increased costs of energy. (It is estimated that a fee of $15/per ton of carbon would result in a 15-cent rise in the price of gasoline.) Free-market forces would drive the transition to a clean energy economy.

Because it is market driven, a carbon tax has the support of many multi-national corporations, such as Kodak, ING, Royal Dutch Shell and Unilever. ExxonMobil has also supported a carbon tax since 2009, when then-CEO, Rex Tillerson, said a revenue neutral carbon tax is “the most efficient means of reflecting the cost of carbon in all economic decisions.”

Gregory Mankiw, Harvard professor and economic advisor to former President George W. Bush and Mitt Romney, agrees, as do conservative economists Arthur Laffer, former economic advisor to Ronald Reagan, and George Shultz, former Secretary of State under Reagan.

This solution is slowly gaining political traction. The Climate Protection Act, introduced on Feb. 14 by Barbara Boxer. D-Calif., and Bernie Sanders, D-Vt., provides for a “fee and dividend” carbon tax. Unfortunately, the same gridlock that has gripped Washington on other issues poses the same challenge to such legislation, and the bill is expected to face an uphill battle.

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