Emissions of carbon dioxide and other greenhouse gases are changing the climate. A carbon tax puts a price on those emissions, encouraging people, businesses, and governments to produce less of them.
While this is a simple explanation, historically, it has been considered a risky political issue because no one likes more taxes, and with the current administration in the White House, all the talk has been on cutting taxes. However, the biggest burden of a carbon tax would fall on energy-intensive industries, and to some extent, lower-income families.
Carbon tax gaining advocates in Congress
Interestingly, despite the anti-climate stance of the conservative establishment, a carbon tax has been gaining popularity among a number of GOP lawmakers. Earlier this year, arch conservatives including former secretaries of state James Baker and George Shultz formed the Climate Leadership Council with the goal of pushing for a carbon tax with the Trump administration, according to the Yale study.
The plan has gained support with a number of major oil companies like Exxon Mobil, BP, and Shell as a free-market solution to our climate woes. Under the Republican plan, the initial tax on carbon would be at $40 per ton of carbon dioxide produced, resulting in an estimated $200 billion per year in revenue. the revenues would be paid out as tax-free dividends to US families, amounting to about $2000 annually for a family of four.
This plan is comparable to carbon taxes in other countries. Finland enacted a carbon tax in 1990 and was the first country to do so. The country’s current carbon tax is $24.39 per ton of CO2. In the United Kingdom, as of 2016, the mandated carbon tax rate was $24-$25 per short ton and has been credited for much of the drops in coal use and carbon emissions.
Yale study asked a different question
The Yale study wanted to find out if Americans would be in favor of using a carbon tax to further combat climate change.”What we aimed to find out was whether there was support among the American public for a carbon tax to address climate change,” Matthew Kotchen, a professor of economics at Yale, said in a statement.
“Specifically, we also wanted to discover how much they were willing to pay, and how they would prefer the revenue from the tax to be used.”
Using a representative survey of 1,226 American adults, respondents were given ten different ways to spend the revenue from a carbon tax and asked whether or not they would support each of these expenditures. Nearly 80 percent were in favor of using the carbon tax revenue for developing renewable energy, or fixing America’s infrastructure, like roads and bridges.
Additionally, average American households were willing to pay $177 per year in a carbon tax on their energy bills, which by itself would amount to $22 billion in revenue annually.
“Interestingly, our analysis indicates strong public support—more than 70 percent—for using some portion of the carbon-tax revenue to compensate coal miners whose jobs are affected by a reduction in the use of fossil fuels,” Kotchen said. “By our calculations, there would be enough revenue from this tax to compensate all coal miners with nearly $146,000 upon the passage of the tax.”
Limitations of the study compared to GOP plan
The amount Americans were willing to pay as part of their utility bills for a carbon tax was significantly less than the amount advocated in the conservative plan pitched to Trump earlier this year says Kotchen. The GOP plan would have American citizens and businesses pay $40 per ton of carbon produced. The average American produces around 16 tons of carbon per year.
“It’s worth keeping in mind that [the Republican proposal] is for a wider ranging carbon tax on all goods and services, so a direct comparison is more difficult,” Kotchen said. “Our study specifically asked about a tax on energy bills, and the response we received showed a minority of support for any form of a dividend to be paid out. We believe that our findings may have significant policy implications.”
Other uses for revenues from a carbon tax
As southeastern Texas and Florida and several other eastern states dry out after being inundated with floodwaters from Harvey and Irma, the costs of cleanup are rising on a daily basis. But besides the funds needed for rebuilding homes and businesses, repairing infrastructure, and hopefully, building better flood protection, there is also the need to reduce greenhouse gas emissions.
Besides funding cleanup campaigns led by FEMA and local agencies. a carbon tax could fund flood protection recommended by the US Army Corps of Engineers, rather than see plans that would have saved thousands of homes discarded by Congress.
Bottom line? A carbon tax could be put to very good use in funding federal programs that provide assistance in natural disasters, while also funding climate change policies. Carbon taxes enjoy bipartisan support and this is one time everyone across America is on the same page.
This very interesting study was published online in the journal Environmental Research Letters on September 13, 2017.
