Let’s Make A Deal

What Should Environmentalists Give Up – and Demand – For A Carbon Tax?

A nice editorial from the Los Angeles Times about the proposed carbon tax being offered by some Republicans under the front group Americans for Carbon Dividends, most notably former Secretaries of State James Baker and George Shultz. Exxon-Mobil is even throwing $1 million into the effort — chump change for such a corporate behemoth. The Times says that a carbon tax is needed, but

[t]he Baker-Schultz plan also includes a waiver that would let oil companies and other emitters off the hook for past acts contributing to global warming, preempting the many lawsuits filed against them. And it would undo the Clean Power Plan and other federal regulations covering carbon dioxide emissions. That makes this sound less like a smart plan to reduce carbon than a toxic quid pro quo — “OK, we’ll go for a carbon tax if these lawsuits go away and we get sharper deregulation.” Another plan, pushed by the Citizens Climate Lobby and other groups, would similarly escalate the per-ton tax over time and return the proceeds in a per-capita dividend, without the corporate giveaways. That’s a better option.

Clearly true, but Congress — particularly this Congress — will pass neither the CCL nor the ACD plan. To the extent that any of these proposals have legs, they are setting forth positions for eventual negotiations. (The cynic in me thinks that Exxon-Mobil and Republicans are just trying to avoid blame for eventual disaster, but let’s assume arguendo that it is sincere).

And that leads to the question: what should environmentalists — or more accurately, the public concerned about the future of the planet — insist on and what should they be prepared to give on?

Now, it’s easy for me to write about this since I have no responsibility, but it seems to me that red lines need to be 1) the size of the tax (as the LAT editorial makes clear); and 2) EPA authority (although there is reason to believe that Brett Kavanaugh et al will feel free to rewrite the Clean Air Act to reject that authority). And that means that liability might be a place to give.

I am somewhat skeptical of tort suits as a guide to good or coherent climate policy. You can do it, and in fact I wrote a whole article about doing it, but tort suits will take a long time, and unless there is a some sort of nationwide injunction or ongoing permanent damages a la Boomer v. Atlantic Cement, it is unlikely to form a key part of coherent climate policy. This isn’t necessarily true: in one sense, the template is the national tobacco Master Settlement Agreement, which has funded large portions of several states’ Medicaid programs. But even there, the payments that last the longest only go through 2025. Climate policy needs to last more or less indefinitely, in order to make the long-term transition into a clean energy future. I cannot imagine permanent damages on the entire American economy to be imposed by courts, just as a practical matter.

All such agreements are risky, particularly when dealing with fossil fuel companies and the Republican Party, both of which have made Epic Bad Faith one of their most important standard operating procedures. If federal climate policy centers on a tax, that includes other risks because tax policy can be changed without a filibuster under budget reconciliation procedures. But getting a real carbon tax on the books is important enough that trading it for liability relief is worth it, in my view.

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Reader Comments

7 Replies to “Let’s Make A Deal”

  1. My answer is “nothing”. Environmentalists should be saying “save Social Security with a carbon tax”. It’s hard to get voters to support any tax ever, but if we earmark the money for something voters really want, we can get it passed without any significant concessions to the fossil fuel industry.

    1. Dear Sam,
      The fundamental problem with a carbon tax is that it does not mitigate climate change. A carbon tax would not cause any measurable effect on global climate whatsoever. A carbon tax is worthless for mitigation, it poses a fraudulent “solution” for climate change.

      1. A carbon tax in the U.S. would pave the wave for a carbon tariff. First among the G6, and then with time, among the G20. The United States is one of the few developed countries whose conservative party still denies mankind’s impact on climate change. It is no coincidence that the oil industry is such a generous donor to the Republican party and to their candidates’ candidate super pacs.

        The oil industry’s well-documented decades-long campaign to deceive the public about mankind’s affect on the climate has had lasting affects, as can be seen in BQRQ’s posts.

    2. Revenues used for a carbon dividend for all households will build the broad based constituency needed to achieve long-term sustainability of this major climate policy. It is also the most equitable and progressive leaving the bottom 70% of households either ahead or breaking even with rising energy/product costs due to the tax (U.S. Treasury study). Using the revenues for other options such as social security, clean energy expenditures, infrastructure etc. leaves the bottom 70% paying more for energy/products and getting scattered trickle down benefits.

      The clean energy subsidies and expenditures are quite regressive with benefits going heavily to higher income households (see Borenstein, Davis “Distributional Effects of U.S. Clean Energy Tax Credits”). Environmentalists who want to compromise on “nothing” will get us to a place just like today–marginal piecemeal regulatory programs (or worse, cap and trade) that are clearly inadequate (and costly).

  2. A carbon fee is not risky because once implemented with an equal dividend sent to every household, it will become quite popular. Like social security and medicare, people will not want to give that up. Members of Congress protect their constituencies, which would be certain to rise up if that source of income were in jeopardy.

    Given that conservatives are ardently opposed to a tax being used for government programs, the equal distribution of a carbon fee to every household (a central tenet of the Citizens’ Climate Lobby proposal) is also essential for conservative support.

    Providing a “get out of jail card” to oil companies in return for a carbon fee is not only bad policy, it is also morally wrong. When corporations knowingly sell a product that damages civilization (as they have done, and are now doing) justice must be served.

    The trade off of a carbon fee for regulations is almost moot at this point since the Clean Power Act has not been implemented, and the emission reductions it required are being made without it via the market place, e.g. the downfall of coal and rise of renewable energy.

    Overall, the Citizens’ Climate Lobby proposal (https://citizensclimatelobby.org/) is our best option.

  3. Your commentary suggests that there is time for deal-making when the UN says we have 12 years left to save ourselves. Please stop weighing serious solutions in these divisive terms and using the label “environmentalists” to refer to people who want to reverse global warming! You think this is clever, attractive writing, but it is irresponsible journalism that fails to focus on what science demands: a mobilization unprecendented in human history. It is high time to refrain from reducing this subject to baiting people with partisan and pejorative labels, because it feeds the false sense of security of those who do not want to face thinking about the actual massive changes in every aspect of our lives that is called for. The LAT endorsement of Carbon Fee and Dividend should stand with clarity without your spin that constitutes a form of denial by distraction from solutions. A proper spin would have been to explore how all people can become unified and mobilized toward the required changes, that may involve some federal policy however incremental and MUST involve unified action at all levels of government. This situation is so dire, any step for a price on carbon now will very soon be upgraded for adequate ambition and equity. Fossil fuels admit to needing to start paying their social cost NOW, so what are we waiting for??? To imply that holding fossil fuel companies accountable for willful degradation of the planet is an “environmentalist” perspective is ridiculous. Ignore that background noise and focus your writing on the economics of a Pigouvian tax. Educate readers that some carbon pricing schemes are shell games and some are effective and you can’t judge by their name, you judge by how transparent and fair they are.

  4. There are a number of possibilities for negative emissions processes, but most of them will cost money. We need negative emissions, so any carbon tax or other scheme probably needs to include funding these processes. IRS 45Q may be useful this way, but it will probably be necessary to have additional mechanisms to transfer some money to them.

    That said, this presents a quandary for me: I am old enough to concur with additional funding for Social Security with carbon taxes, and I won’t be around when the major effects of climate change hit.

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About Jonathan

Jonathan Zasloff

Jonathan Zasloff teaches Torts, Land Use, Environmental Law, Comparative Urban Planning Law, Legal History, and Public Policy Clinic – Land Use, the Environment and Loc…

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