Climate change: 5 reasons why the U.S. should enact a carbon fee

Minnesota businesses can get on board with a market approach.

By Roger Parkinson

June 1, 2016 at 11:02PM

The paper is piling up at the U.S. Court of Appeals for the D.C. Circuit. The Environmental Protection Agency's Clean Power Plan is in the cross hairs of half the states, and judges are plowing through briefs filed by more than 1,000 trade associations, lawmakers, advocacy groups and others with a point of view.

You may hate the EPA rule. Or you may love it. Maybe you have no opinion at all. But almost all of us could probably agree on one thing: There must be a simpler, quicker and more effective way to fight climate change.

In fact, there is: a revenue-neutral carbon fee.

Such a fee has many advantages.

First, it would give every American and every company doing business in this country a clear incentive to reduce consumption of coal, oil and other fossil fuels that are increasing global warming and contributing to a host of serious problems, including drought and the spread of diseases such as the Zika virus.

Second, a carbon fee of $35 per ton would generate more than $150 billion of revenue per year, half of which could be used to reduce the U.S. corporate income tax — now the highest in the industrialized world (an uncompetitive 35 percent) — to 25 percent. The other half could be used to reimburse low- and lower-middle-income earners for slightly higher energy costs. (A $35 per ton fee translates to 33 cents per gallon of gas.)

Third, carbon fees work. The province of British Columbia has had one since 2008. The tax has reduced fossil-fuel consumption by 9 percent, while use in the rest of Canada has risen. Meantime, British Columbia's GDP growth has outperformed that country's.

Fourth, even if the Clean Power Plan survives court challenges, it will not do enough to enable the U.S. to meet its pledge at December's conference in Paris. And all of the pledges made there, if fulfilled, will not stop the global temperature from rising above the 2-degrees-Celsius goal. But a revenue-neutral carbon fee would enable our country to meet the Paris pledge and would even put us in a position to contribute our full share to the carbon-dioxide reduction needed to keep the temperature rise below 2 degrees.

Fifth, a revenue-neutral carbon fee would be much simpler and easier to implement than a cap-and-trade system or the Clean Power Plan. In fact, it would greatly reduce — or eliminate — the need to use EPA regulations at all. Such regulations could change constantly, thus creating uncertainty that would inhibit business investment. A carbon fee is a market solution, not a regulatory solution.

Could such a fee pass Congress? I think so, and here's why. Recently I had a chance to sample congressional reaction. I sat down with 10 members of Congress or their aides to explain why this former businessman believes that this is the smartest idea out there.

I was accompanied by representatives of the Partnership for Responsible Growth. This nonprofit began work last year to promote adoption of a carbon fee that not only would counter climate change but also would promote growth via tax reform. This group has now conducted more than 200 such visits, mostly with Republicans. The bottom line: A sizable majority of these members of Congress are open to this creative compromise, as long as business and opinion leaders back home are on board. I urge Minnesota's business leaders to tell the 10 Minnesotans on Capitol Hill that it is time to act.

There are signs that public opinion is moving in this direction. A survey by three GOP pollsters in September showed that 54 percent of conservative Republicans would support a carbon fee if the proceeds were rebated.

The recent finding by a scientific report that sea levels are likely to rise much faster than previously believed — perhaps by 5 or 6 feet over the next 85 years — injects even more urgency to the task facing us. Let's put a price on carbon, at long last, and put our faith in the free market to carry us to a healthier, more prosperous future.

Roger Parkinson was president and publisher of the Star Tribune from 1983 to 1992 and later served as president of the World Association of Newspapers.

about the writer

about the writer

Roger Parkinson

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