Idea #12: Support a carbon tax

One strategy to combat climate change is to convince other people to reduce their carbon footprints. You are thinking, no doubt, that this is unrealistic. But what if I told you that there is a beautifully simple way that we could motivate everyone in the U.S. to care about their carbon footprint?

Much of the following discussion is taken from the book Paying for Pollution by Gilbert Metcalf.

Everyone—even the staunchest of climate change deniers—cares about price. Make an activity more expensive, and people will do it less often. Ergo, reducing carbon emissions is very simple: tax them.

Concretely, such a tax could be implemented by collecting payments from oil refineries and coal mines based on how much fuel they produce. These costs would permeate the economy through a combination of changing wages and prices until ultimately the label price of all goods and services reflected the true social and environmental cost of their production.

Obviously, there are many details involved in crafting a good carbon tax (see Metcalf’s book), but here are the main talking points:

  1. It can, and should, be designed to be revenue neutral. If it doesn’t increase or decrease government spending, nobody can object based on arguments about “big government”.
  2. It is market-based, so the federal government is barely involved. In fact, once a carbon tax is in place, we can safely roll back a lot of government environmental regulations.
  3. It can, and should, be designed so that it’s not a regressive tax. The revenues can be paid back as equal “carbon dividends” for everyone, such that the overall tax rate decreases for nearly everyone below 70th percentile income.
  4. The vast majority of economists (conservative and otherwise) agree that it, or a very similar technique called cap and trade, is the most economically efficient way to address greenhouse gas emissions.

What excites me the most about a carbon tax is that it is both (1) effective at reducing emissions, and (2) economically beneficial to most people in the U.S. It seems to me that if every voter in the U.S. understood the four talking points above, then eighty percent of them would support it and Congress would pass a carbon tax within six months.

This TED talk by Ted Halstead is another nice summary. I love this video for a few reasons, but primarily because it’s unabashedly conservative. If adopting an economically conservative approach to climate change brings more Republicans on board, then I think we should all be in favor.

To help enact a carbon tax, here are two things you can do.

  1. Talk to your friends about a carbon tax. Encourage them to talk to their friends. Again, the more people that understand this, the sooner it becomes law. In particular, share Ted Halstead’s talk with anyone you think might lean Republican.
  2. Find out where your representative and your senators stand on a carbon tax. If they support it, write a note to thank them. If they don’t, let them know that this is an issue that you care about. You can browse current bills in U.S. Congress here. In particular, there are these two Senate bills and these two House bills. The latter was introduced by a Republican representative!

Wouldn’t it be so much simpler if the cheapest option was always the best one for society?

Further reading:

  • Climate Leadership Council (the people behind the TED talk)
  • Carbon Tax Center
  • Sweden has had a successful carbon tax since 1991.
  • Canada instituted a nationwide carbon tax in 2018, although the implementation details are left up to each province. Here’s some recent news.
  • Here are some arguments against a carbon tax. Perhaps the most serious objection is that it will have to be very expensive, on the order of $5 per gallon of gas, in order to meet emissions reduction targets. (Most carbon tax plans start at a relatively low price and gradually increase it over time.)

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