All I Want for Christmas is a Price on Carbon

As 2013 winds down, there are promising signs that we may actually
see a price on carbon in the U.S. In 2010, the cap-and-trade bill was
killed in the Senate by the fossil fuel industry’s ubiquitous
misinformation campaigns. However, a confluence of events have renewed
hopes that we may yet see carbon pricing legislation that could
significantly reduce U.S. carbon emissions.

Why we need a carbon tax

Paying for carbon pollution is the best way to put free markets to
work to reign in global warming causing emissions. There is a virtual
consensus among economists who say that putting a price on carbon is
the most effective way to fight global warming. The case for carbon
pricing is strong, this point has been repeatedly made by the World Bank and a number of economists including a team from the London School of Economics.

According to most analyses, carbon pricing is the most powerful
regulatory mechanism we have to bring down emissions without wreaking
havoc on the economy. Putting a price on C02 will allow market forces
to drive down demand for carbon rich industries like fossil fuels and
help to buoy cleaner low carbon technologies like renewable energy.

On a very pragmatic level, carbon pricing could enable the U.S. to
achieve the pledges it has made at UN climate talks. This includes
carbon emissions cuts of 17 percent below 2005 levels by 2020, and 80
percent by 2050.

Corporate juggernauts are onboard for putting a price on carbon

One of the reasons to be hopeful comes from a Carbon Disclosure Project (CDP) report
which indicates that at least 29 big American corporations are actively
preparing for a carbon tax. The companies in the CDP report include
powerhouses like American Electric Power, ConAgra Foods, Delta Air
Lines, Duke Energy, DuPont, Google, General Electric, Microsoft,
Walmart, Walt Disney and Wells Fargo.

What is most surprising is that this list also includes five major
oil companies (BP, Chevron, ConocoPhillips, ExxonMobil, and Shell).
While they can hardly be called champions of a low carbon economy, they
are, if nothing else, economic realists. They see the writing on the
wall, and their actions are a strong indication that they see some form
of carbon tax as inevitable.

Make no mistake about it, fossil fuel companies are not embracing the
common good, they are acting in their own best interest. Preparing for
the expense of a carbon tax is simply good business and for many, it
represents a great opportunity. To illustrate the point, ExxonMobil,
America’s wealthiest corporation supports a carbon tax because it has a
vested interest. As the nation’s biggest producer of natural gas, it
would profit from carbon pricing. Such a scheme would inflate the costs
to the coal and crude oil industries far more than natural gas.

Republicans may be left out in the cold

Support for a carbon tax from corporate interests including fossil
fuel companies could be a real problem for the GOP’s political future.
Republican climate denial is a salient reason for the failure of
cap-and-trade legislation in 2010. The GOP’s resistance to a science based assessment of climate change was
underscored during the 2012 presidential elections and they continue to
beat the climate denial drum to this day. As recently as Wednesday
December 11, their ignorance was on display for all America to see. On
this day, Republicans in the House of Representatives held sham hearings that called upon climate change denying scientists to reinforce their subterfuge.

Traditionally, corporate interests are the single most important support base for Republicans. However, as the companies responsible for global warming prepare to accept a price on carbon the GOP has reason to be concerned that they may be left out in the cold.

The Koch brothers may be the only friends in the oil industry that the GOP has left. Koch industries is still onside with climate denial and they continue to pressure Republicans to stay onboard
the denial train. In 2012, all of the GOP’s presidential candidates had ties to the owners of Koch industries and they continue to use their front groups to oppose science and
resist any form of carbon pricing.

However, Koch has repeatedly
been exposed as the nation’s biggest purveyor of misinformation. Koch
industries is a pariah even to the dirty and destructive fossil fuel
industry. Republicans who embrace Koch may undermine their own election
hopes and further tarnish the GOP’s already badly battered brand.

According to the latest research, Americans, including supporters of
the Republican party, embrace the veracity of climate change and want
government to do something about it. A Stanford University study showed
that all states, even traditionally Republican states, acknowledge global warming and would like government to find ways to reduce climate change causing emissions. Recent election and ballot initiatives may also signal a change in American attitudes.

Republicans have effectively painted themselves into a corner.
Changing public and corporate attitudes are stranding GOP policy
positions. If Republican support is eroded they may not have enough
political representation to thwart progress and this could in turn pave
the way for carbon pricing.

Carbon trading in place and calls for emissions reduction from U.S. state governments

Carbon trading is increasing around the world
with emissions trading schemes now operating in 35 countries, 13
states, provinces and cities. Europe already has the world’s biggest
emissions market and China is launching its own schemes. In North
America, new additions to the Regional Greenhouse Gas Initiative (RGGI)
and the Western Climate Initiative (WCI) doubled carbon trading in 2012.
There are now 48 schemes internationally and when added to the 7 in
China, a total of 880 million people, representing about 20 percent of
global emissions will be part of some form of carbon pricing.

As reported by Reuters on December 16, fifteen U.S. states
(California, Colorado, Connecticut, Delaware, Illinois, Maine, Maryland,
Massachusetts, Minnesota, New Hampshire, New York, Oregon, Rhode Island
and Washington) are asking the Environmental Protection Agency (EPA) to adopt their carbon-cutting policies.

As part of President Barack Obama’s climate change strategy announced
in June, the EPA has been directed to develop federal emissions
standards for existing power plants. Now a coalition of states have told
the EPA that they would like to see a “system-wide” approach to cutting
emissions rather than working on individual power plants.

The Clean Air Act has stipulated that states must develop their own
plans to meet EPA standards. States have been asked to provide feedback
ahead of a planned June 2014 proposal which is scheduled to be finalized
a year later. States that are part of carbon pricing schemes want to
make sure that the EPA gives them credit for being early adopters.

Benefits of price on carbon far outweigh cost

The most frequently cited argument against carbon pricing and carbon taxes is the cost. According to the Potsdam Institute for Climate Impact Research,
the introduction of a carbon tax could cause fossil fuel companies to
lose between $9 trillion an $12 trillion in profits by the end of the
century. That is because a carbon tax would drive up costs and decrease
demand, as the demand was reduced the prices would fall.

However, the Potsdam Research indicates that the cost to fossil fuel
companies would be more than compensated for by carbon taxes (or carbon
auction revenues). Their analysis reveals that such taxes would generate
revenues equaling $21 trillion to $32 trillion by the end of the
century. That translates to a net economic benefit of around $20
trillion, in addition to potentially staving off the worse impacts of
climate change and providing citizens with cleaner air and water. The
profits from carbon taxes could be used for green-energy projects and
climate adaptation efforts.

There was a time in the recent past when putting a price on carbon
was dismissed as a utopian dream, however, the overwhelming logic is
becoming increasingly undeniable, even in the most unlikely places.
The introduction of a carbon tax is unlikely to occur without a
political fight, but the weight of the evidence will inevitably triumph
over ignorance.

Source: Global Warming is Real