"A price on carbon would mitigate climate change and its worst impacts"

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   July 16, 2018 Ryan Martel Federal Policy Blog Updated July 16, 2018

In April, House Majority Whip Steve Scalise, R-LA, and co-sponsor Rep. David McKinley, R-WV, introduced a resolution in the U.S. House of Representatives that denounces a tax on carbon pollution as “detrimental to the U.S. economy,” among many other criticisms. This non-binding resolution — which essentially allows (or forces) lawmakers to go on the record to support or oppose a certain policy — focuses exclusively (and incorrectly) on the perceived negative economic impacts of carbon pricing.

The resolution misses the mark by offering a one-sided, unbalanced critique and revealing that when it comes to a carbon tax — which is one type of carbon price — Reps. Scalise and McKinley are out of step with major businesses, public opinion, and much of the rest of the world.

As Congressman Scalise's anti carbon tax resolution gains traction, private sector voices are weighing in in support of a federal price on carbon. Investors worth nearly $700 billion in assets under management and major companies have spoken out against the Scalise resolution and against the idea that a national price on carbon would be "detrimental" to the US economy.

This is the second time that Rep. Scalise has introduced this resolution, and the arguments he presents have only become more outdated the second time around. The resolution ignores and misstates the economic impacts, benefits, and political and public support for carbon pricing — a market-based policy mechanism designed to reduce carbon pollution by “pricing” it through the application of a tax or the sale of permits.

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The transition a clean energy economy is inevitable and irreversible, OK, and I agree a price onNo, carbon thanks pollution user to experience would help ensure a smooth, predictable, and rapid transition. If Reps. Scalise and McKinley — both of By continuing to browse the site, you are agreeing to our use whom represent states with significant fossil fuel industries — are serious about protecting the economic of cookies.

Give me more info wellbeing of their constituents, they should be eager to support a price on carbon pollution. A well-designed effort would not only help mitigate climate change and its worst impacts, but the revenue generated could ensure that communities and regions with fossil fuel-based economies receive significant financial support.

Climate change is a real problem

We cannot discuss the benefits of carbon pricing without first acknowledging and understanding the problem it is trying to solve. Climate change — and the greenhouse gas emissions causing it — represents the biggest market failure in human history. It poses threats to our economy, international stability, human health, our way of life, and the things that we hold dear. It is an enormous global challenge — but one that we can solve with innovative private sector leaders, smart policy design, and international collaboration.

Fortunately, economists have long understood that we can correct market failures, if we have the political will to take action. A price on carbon does just that.

It is unfortunate and telling that the House resolution makes zero mention of climate change or even acknowledges that a carbon price is the climate policy most in line with conservative values and thinking.

Impact on U.S. communities and the economy

The House resolution is primarily intended to convey the message that a price on carbon would hurt U.S. jobs and the economy. However, in enumerating a long list of perceived grievances and ill-effects, it neglects to mention real-world examples and multiple economic studies that show otherwise. It makes no mention of how the revenues from carbon pricing could be used to lower other, more distortionary taxes — — strengthening the U.S. economy, minimizing job losses and perhaps even creating jobs.

Recent modeling on the economic impacts of a carbon price by Resources for the Future finds that Reps.

Scalise and McKinley’s claim that a carbon price “kills jobs” is hyperbolic at best. Depending on how the policy is structured, short-term job losses across the U.S. economy could be minimal. In fact, this analysis shows that a carbon price could even result in job gains, even without taking into account the significant environmental benefits to the economy and all Americans that come from tackling climate change.

U.S. regional and state carbon pricing successes

The U.S. states and regions that have implemented carbon pricing have some of the strongest economies in the country. For example, the Regional Greenhouse Gas Initiative (RGGI) is a cap and trade program (a type of carbon pricing) for the electric power sector in the northeast and mid-atlantic states that has been in place since 2008. A recent report from the Acadia Center found that RGGI has helped reduce the electric

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power sector’s greenhouse gas emissions 40 percent since 2008. AtOK, the same I agree time, electricity No, thanks prices in the user experience region have decreased by 6.4 percent, while they have increased by 6.2 percent on average in all other By continuing to browse the site, you are agreeing to our use states. The economies in RGGI states also grew by an additional 4.3 percent relative to non-RGGI states of cookies.

Give me more info during that time.

The state of California is the fifth largest economy in the world, housing one of the fastest growing and most innovative sectors of the economy. It also happens to have extremely ambitious climate policies, including a statewide carbon price in the form of a cap and trade program. The following graph shows how California’s economy has grown as its emissions have declined — providing evidence that economic growth and emissions reductions can happen at the same time, and directly contradicting the claims made in the Scalise-Mckinley resolution.

Global prevalence of carbon pricing

Carbon pricing has become a popular global tool for efficiently reducing carbon pollution. As more countries and jurisdictions implement a carbon price in the form of either a tax or trading program and continue to strengthen those programs, claims made in the House resolution that a U.S. carbon price would hurt U.S. competitiveness in the global marketplace are undermined. In fact, eventually enough countries will likely adopt strong enough carbon prices that NOT having one will put the U.S. at a competitive disadvantage when it comes to our trade position and exports. If other countries include carbon tariffs on foreign goods (something that is already being discussed), and the U.S. continues to rely on fossil fuels, American goods will become increasingly expensive for overseas markets and domestic producers and manufacturers will pay the consequences.

A recent World Bank report shows the growing adoption of carbon pricing programs globally. 70 national and subnational governments around the world currently price carbon pollution, and nearly 20 more have signalled their intention to do so in the near future. Across the 51 carbon pricing initiatives, 26 are carbon taxes and 25 are cap and trade systems. Once fully implemented, these systems will cover about 20 percent of global greenhouse gas emissions. In 2018, the total value of carbon pricing systems is $82 billion, representing a 56 percent increase compared to the previous year.

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Support user for carbon pricing experience

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Give me moreenormous info Action onofclimate enjoys support from the private sector, conservative and liberal economists, climate scientists, and — most importantly — everyday Americans.

Major American corporations are stepping up to support climate action and carbon pricing. Nearly 40 Fortune 500 companies have declared that “We Are Still In” the Paris Agreement. Corporate support for a carbon price is perhaps articulated most clearly by members of the Climate Leadership Council, including ExxonMobil, Shell, BP, GM, Johnson & Johnson, P&G, Pepsico, Santander, Schneider Electric, Total, and Unilever.

Institutional investors are even more clear and consistent in their call for a price on carbon. Last year, 400 investors from around the globe — many based here in the United States and all together representing over $22 trillion in assets under management — wrote to G7 and G20 nations calling for them to effectively price carbon. This year, investors with $28 trillion in assets under management sent a similar letter to the G7 nations reiterating that support.

Some of the best economic minds in the country also strongly support carbon pricing. A growing number of conservative and libertarian scholars at organizations like the Niskanen Center, R Street Institute, and the American Enterprise Institute have all voiced support and argued for a carbon price.

Finally, a March 2018 poll of registered votes by Gallup found that 71 percent of respondents favor a carbon tax on fossil fuel companies and support using the revenue to reduce other taxes. The poll found that on average Americans are willing to pay almost 15 percent more on their energy bills for this. In addition, the poll found that the most popular use of the significant revenue that would be raised from a carbon price is clean energy investments, infrastructure investments, and transition assistance for fossil fuel workers and associated communities.

These numbers hold up even when you look at Reps. Scalise and McKinley’s districts. Estimates from the Yale Project on Climate Change Communication found that, in 2016, 69 percent of adults in Rep. Scalise’s district (LA-1) supported regulating carbon dioxide as a pollutant. In Rep. McKinley’s district, an estimated 80 percent of adults supported regulating carbon as a pollutant.

The way forward

The recent political polarization around climate change — evidenced most recently by this House resolution — is extremely unfortunate. The atmosphere doesn’t care about our political affiliations or differences. It doesn’t care that civilization has evolved and adapted to a certain set of temperature ranges.

It doesn’t care that increasing temperatures and extreme weather events will inject significant uncertainty into local, national, and global economies and impact our way of life.

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Fortunately, private sector voices, conservative economists, and American OK, I agree citizens in No, red and thanks blue states user experience are stepping up to help bridge the partisan divide on this issue. Climate change presents major economic By continuing to browse the site, you are agreeing to our use challenges to the U.S. - and the impacts of rising temperatures put us all at risk, from major American of cookies.

Give me more info business to small-town families. Investors and companies with long horizons recognize the risks to their supply chains, products, and customers, and they want to do something about it.

In Congress, new Republican members are upending ten years of almost uniform party opposition to climate action. The Climate Solutions Caucus in the U.S. House of Representatives now boasts over forty Republican members, many of whom truly believe that Congress needs to take action on this issue and are working to do something about it.

Ceres will continue to make the economic case for climate action in the U.S. and advocate for economically-efficient policies like a well-designed carbon price, along with other supportive policies. With broad, cross-sector support and public opinion gaining momentum, this House resolution will eventually become a thing of the past — to be replaced by bipartisan, innovative ideas on how to move forward with real solutions.

(This blog was updated on July 2, 2018 to include a link to a Ceres BICEP Network letter in support of a price on carbon.)

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Ryan Martel Senior Director, Federal Policy

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