A new carbon tax has the possibility of revolutionizing our push toward carbon neutrality by 2050, but it isn’t from the progressive playbook, it’s from the Republican Party. Despite decades of proposed climate legislation from Democrats, Republican stonewall opposition has limited progress toward cleaner energy. Not only could this new carbon tax be revolutionary, it could also be an indication of a renewed Republican Party, one more willing to contribute to climate policy in the future.
Energy markets are commodity markets — they follow supply and demand. As any good consumer would in any commodity market, average Americans want to pay the lowest price for gas and their monthly electric bill. As such, there is demand in the energy market for low costs that is satisfied by the cheapest energy sources: fossil fuels. Yes, they are cheap, but they’re also polluting the earth, leading to the catastrophic events of the climate crisis. Market forces alone will keep the energy sector and the planet on the same current trajectory: private profit and collective human suffering. However, a carbon tax could reorient the priorities of the energy sector by providing an incentive for cleaner energy. The leading concepts of a carbon tax involve a tax that would be collected primarily from the producers and importers of fossil fuels. Coal would be taxed at the mine, natural gas at the processing plant, petroleum at the refinery and imported fuel at the border. The tax would be based on the carbon content of the fuel, and the rate would increase over time. A carbon tax would incentivize companies to pollute less, and the market would trend toward cleaner energy.
However, a carbon tax has yet to be implemented in the United States because of the preoccupation with the harsh economic effects on consumers, especially those with lower income. Whenever the costs of production increase, a company will charge the consumer more, and that’s exactly what would happen with a carbon tax. A carbon tax makes energy production more expensive for the fossil fuel industry, and they would offset that cost increase by charging more for their product. The cost of filling your car with gas and paying your bills at the end of the month would increase. When the French government attempted to impose a carbon tax on their population, there were mass protests lasting for months. Dubbed the “Yellow Vest Movement,” French citizens took to the streets in the hundreds of thousands to protest the carbon tax. Wealthier people aren’t as preoccupied with a carbon tax since they can afford it, but those who are less affluent are much more affected as they have to spend a larger percent of their income than wealthier people.
A new plan, however, effectively implements a carbon tax without leaving a heavy financial burden on the consumers. The Conservative Case for Carbon Dividends, conceived of by the Climate Leadership Council, describes, “All proceeds from a nation’s carbon fee would be divided equally among its citizens, and returned to all adults through a quarterly dividend check automatically deposited in their bank accounts.” In other words, the government wouldn’t collect the taxes, the money would go directly into the pockets of American citizens to offset the increased costs of buying gas and turning the lights on. This isn’t from Andrew Yang’s playbook. It’s a conservative, Republican proposal, and it’s a derivation of universal basic income. This carbon tax proposal is supported by a coalition of economists, scientists, corporations and leaders in the energy industry such as Shell, BP and ExxonMobil, and 3,554 U.S. economists, many of whom are conservative.
A market-based solution is the Republican policy of choice on most issues, including this new and improved position on climate change. The conservative case for carbon dividends already has bipartisan support and promises an economic and environmental benefit. This isn’t the same Republican Party that brought snowballs onto the Senate floor and vigorously denied the existence of climate change for decades. The Republican Party has an amazing opportunity here to accept the reality of climate change and grow environmental protections while sustaining economic growth. In comparison to enormous climate spending bills, such as the Green New Deal, a Republican climate stance could create an opportunity for the party to return to fiscal conservatism as well. Meanwhile, without an ambitious climate policy, the Republican Party risks losing younger voters who care about climate change. The party has everything to gain from embracing a conservative idea of carbon pricing, taking the lead on climate policy in a politically viable, economically and environmentally sustainable manner.
Even so, this isn’t to say that Republicans are champions of climate policy. They have never been, and they still are not. Their climate policy for the last 30 years has been complete denial, and still today a Republican president is stripping environmental protections in our national lands and pushing for increased use of fossil fuels. Whether they openly admit it or not, the Republican strategy has largely remained a strict denial. But the Conservative Case for Carbon Dividends may be an indication of a change in the Republican ideology that might prove essential for substantial climate discussion going forward.
The U.S. is not on the right track to reaching carbon neutrality by 2050. A one-sided approach from the Democrats has seen little success so far because of Republican opposition, but a rebirth of the Republican Party in terms of fiscal conservatism and environmental protections could be the answer for climate policy in the U.S. This conservative carbon tax may not be the whole answer, but it could be a symptom of a renewed discussion about climate change in this country, and a precursor of Republican contribution to necessary climate policy.
Reid Diamond can be reached at reiddiam@umich.edu.