WILLIAM RAU
What might be Biden-Harris’ strategic entry into climate legislation? What is the must-win bill Biden should want delivered to the Resolute Desk?
Without exception, bill No. 1 must reduce greenhouse gas emissions at least 50% by 2030. Only large, fast reductions in emissions will save a habitable planet for our children.
Perhaps the only bill that can achieve large, sustained, efficient and equitable reductions in emissions is a dividend-based carbon tax. According to Roy Wehrle and his associates (2020), there are at least three things it would do.
First, the law places a federal tax, ($25 per metric ton of carbon with increases of $10 each subsequent year) on coal, oil and natural gas at the mine face, well head or collection pipeline. The government already collects such levies – e.g., from coal companies for black lung disability compensation. It would simply expand existing collection machinery.
Second, all net tax collections are distributed in equal shares to each adult citizen. Legislation makes big polluters pay while increasing or leaving intact the purchasing power of the average American family. Carbon taxes, ipso facto, are regressive; they fall heavily on the poor by increasing the cost of basic necessities. However, for roughly 60% of families the carbon dividend covers these costs. Those who are carbon frugal, those with limited purchasing power, will come out money ahead, thousands of dollars ahead for those in the bottom income deciles (Fremsted & Paul 2018).
Who pays? The wealthy because they are profligate carbon consumers. “The top 1% of global wealth holders,” Oxfam (2015) notes, “generate 175 times more carbon than the bottom 10%.”
Third, a border adjustment tariff protects American businesses. Countries without carbon taxes have the carbon content of their exports taxed at prevailing U.S. rates. Thus, companies in nations without carbon taxes gain no polluter’s advantage in our marketplace. With a level playing field, energy-efficient or “carbon-lite” firms have the advantage.
Nations wanting tariff-free access to our market, the world’s largest, will adopt equal carbon taxes. Carbon taxes will therefore spread through trading networks. The prospect of reducing carbon emissions across scores of nations is one of the most promising features of this legislation. Many nations will board our carbon reduction bullet train.
In order to work effectively, the law exempts no industries or activities; agriculture, for example, will be covered under the plan. To minimize an increasingly harsh climate’s ability to disrupt crop production, farming must reinvent itself. This legislation will help midwife its largely fossil-free, more resilient rebirth.
Next, the plan is limited to adult citizens. Adding children would make the plan more complex and difficult to manage. Third, there are no export subsidies. We must reduce emissions, not export them overseas. Fourth, midcourse tax adjustments, to hew close to legislated carbon reduction targets, will be placed in the hands of an apolitical Climate Council that functions like the Federal Reserve. To keep special interests at bay, a Fed-like council is necessary.
Future columns will build and expand on these carbon tax rudiments.
References
Wehrle, Roy, Don Wuebbles, and Francine van den Brandeler. 2020. Addressing Climate Change Using a Carbon Tax & Dividend Plan Within a Global Compact. Greenleaf Communities; https://greenleafcommunities.org/climate-policy/
2020 (Oct 6). Commentary: How the U.S. could lead a global climate compact. Chicago Tribune: https://www.chicagotribune.com/opinion/commentary/ct-opinion-climate-change-global-compact-20201006-h5d46sscrvdz3e36el3p7hxgcq-story.html
Fremsted, Anders & Mark Paul. 2018. Disrupting the Dirty Economy: A Progressive Case for a Carbon Tax. People’s Policy Project; https://www.peoplespolicyproject.org/wp-content/uploads/2018/09/CarbonTax.pdf
Lavelle, Marianne. 2020 (Nov 6). A Bipartisan Climate Policy? It Could Happen Under a Biden Administration, Washington Veterans Say. Inside Climate News; https://insideclimatenews.org/news/05112020/election-2020-biden-mcconnell-senate-climate-change-policy
Green, Matthew. 2020 (Oct 8). U.S. could adopt carbon tax under a Biden presidency, ex-Fed Chair Yellen says. Reuters; https://www.reuters.com/article/us-usa-climate-tax-idUSKBN26T23L
Oxfam. 2015. Extreme Carbon Inequality. Oxfam; https://www.oxfam.org/en/research/extreme-carbon-inequality
William Rau is Illinois State Univesity professor emeritus of sociology.