Carbon pricing represents the best answer to our climate danger

Op-ed by Sen. Sheldon Whitehouse and James Slevin

The Washington Post, March 10, 2020

One of us is a labor leader from a union whose members are hard at work in all facets of energy generation, from coal-fired and nuclear power plants to natural gas and renewable energy systems. The other represents a coastal state at grave risk because of climate change. We have come together in an unusual but badly needed alliance to argue for a path forward to address the twin threats of a changing climate and growing economic inequality.

That path forward includes imposing a price on carbon — not the usual position for the leader of a union whose members work in the energy industry. Indeed, this represents the first time an energy-sector union has announced support for a carbon price.

The path forward also features a new, and newly respectful, way of talking about the men and women who took on the difficult and dangerous tasks of producing such fuels for our economy — not the usual rhetoric from environmentalists who have too often dismissed the contributions of these workers and diminished the threat to their livelihoods.

There should not be, and does not need to be, a trade-off between protecting our planet from destruction and supporting workers who have spent their livelihoods in carbon-intensive industries that also sustain the economy.

The answer is imposing a price on carbon and using the revenue in a way that helps workers, families and communities.

Pricing carbon is the most powerful and efficient way to reduce carbon pollution. Charging big corporations a price for their carbon emissions — as many other countries around the world already do — would generate abundant revenue to provide economic security for coal workers, their families and the communities they call home.

A price on carbon makes the transition period to lower-emitting energy sources less harsh than it would be under raw and sudden market conditions; miners and power-plant workers will be less at risk. In other words, a carbon price could mean the difference between a controlled descent and a steep crash.

By way of example, carbon-capture technology could offset emissions and extend the safe operating life of fossil plants and fossil fuels. Putting a market price on carbon will provide an incentive to develop that technology, transforming carbon dioxide into a useful commodity rather than a waste product.

However, it is not enough just to manage an orderly transition and to rebate carbon-fee revenue to consumers, as is commonly proposed. It is also important to honor the workers who mined the coal and operated and maintained the power plants that built the America we have today. For much of the past century, coal generated more than half of the electricity that powered our modern lives. We Americans have all enjoyed the economic wealth and power built by these women and men.

How to best honor them? First, we should honor the promises made to them about their pensions and health plans. Too many plans have been left underfunded or broke after companies abandoned their commitments. We should use revenue from the carbon price to make those pensions and health plans whole, and make workers eligible for these benefits whenever plants close.

What about something similar to a GI Bill college benefit for these workers and for their children? With a carbon price, we can afford it, and we could show our appreciation and respect in a tangible way.

We could fund the economic redevelopment of towns and counties that depended on mines or power plants. It is important that we provide not only workers, but also the communities they call home, the opportunity to remain vibrant places where families live and work — not municipal tombstones abandoned to cold market forces.

Think of it this way: These men and women undertook the difficult and dangerous jobs that made America great. Look at them as our energy veterans; they won the world war for economic dominance and powered the American Century. As new technologies take hold, and we power into a new American Century, they must not be left behind.

In our divided country, a sad and unnecessary part of our national climate conversation is its failure to respect the economic value our energy veterans created. Too many good people feel abandoned and disrespected. There is a simple human proposition that hard and successful work deserves appreciation and fair treatment. Let’s honor that proposition.

A carbon price represents the best answer to our climate danger. It also makes it affordable to do the right thing and help bind our country together. We should seize that chance.

Sheldon Whitehouse, a Democrat, represents Rhode Island in the U.S. Senate. James Slevin is president of the Utility Workers Union of America.

How Europe's Border Carbon Tax Plan Could Force the U.S. To Act on Climate Change

By Justin Worland, Time magazine, March 4, 2020

The list of reasons to act urgently to stem greenhouse gas emissions and address climate change is long and established, but Republicans in Washington have remained largely unmoved. This week, the European Union’s executive branch unveiled a new law that could change that.

On Wednesday, European Commission President Ursula von der Leyen presented the European Climate Law, which would bind the bloc to eliminate its climate footprint by 2050 and officially launched the policymaking process to enact a new tax on products from countries that aren’t working to reduce their emissions. Such a rule could leave U.S. companies at a serious—and costly—disadvantage as they compete for business in the EU.

It’s an idea that has Washington policymakers on both sides of the aisle talking in stark terms about how it could shake up climate and trade discussions in the U.S. — not to mention across the rest of the globe. “When I was our ambassador to the EU, I spent a lot of time on some very difficult trade issues,” said Richard Morningstar, the founding chairman of the Atlantic Council’s Global Energy Center, at a February event. “This could become the mother of all trade issues if not handled right.”

The EU’s plan is a significant escalation, but it’s not a complete surprise. The intellectual foundations behind policy, which the EU has dubbed a border carbon tax, have been discussed in policy circles for years. As the EU has doubled down on policies to reduce emissions, and the U.S. and others have lagged, pressure mounted on the bloc to take more sweeping action. “It’s pointless to reduce carbon emissions inside Europe, to then import them from outside,” Bruno Le Maire, the French finance minister, told reporters at the World Economic Forum meeting in Davos in January.

With global impacts in mind, France began a low-key campaign last year to push the EU to implement a border carbon tax. The new president of the European Commission, the EU’s executive body, doubled down last fall, upon taking office. She included a border carbon tax as a pillar of her proposed Green Deal, which includes a commitment to eliminate the bloc’s carbon footprint and provide more than $1 trillion in green finance.

Trump’s destruction of trade norms also helped pave the way toward the EU’s embrace of a border carbon tax. For decades, western countries have been careful to avoid trade barriers that might damage the delicate global trade regime, but Trump’s widespread use of tariffs on allies and competitors alike changed the dynamic.

On March 4, the Commission unveiled new text of a climate law that would lead European Union countries to eliminate their emissions, though full details of the border tax aren’t expected until next year at the earliest.

Implementing the policy will take years as the EU Commission seeks the necessary approval from its member countries and faces likely challenges before the World Trade Organization (WTO). Still, EU officials insist they will not be deterred from implementing the tax, and many international climate and energy experts say that it’s no longer a question of if, but when a country — or group of countries — working to reduce its emissions implements such a rule. “If the world is not pursuing common ways of pricing carbon emissions then there will inevitably be something like these border adjustments,” says Ernie Moniz, a former U.S. energy secretary who now runs the Energy Futures Initiative a non-profit that conducts research on the future of energy.

The potential implications of such a measure are just beginning to ripple across the globe. Officials in China, the world’s largest emitter, worry that it might dampen the country’s economic growth plans, while those in the U.S. foresee a potential fight. The Trump Administration or a future White House could complain to the WTO, alleging that the policy violates member countries’ commitment not to discriminate between WTO members, among other things. While this is new ground for the WTO, many experts believe such a challenge would ultimately fail. A 2019 report from the law firm Mayer Brown found that a well-constructed border carbon policy would likely stand up to World Trade Organization rules.

At the same time other Republicans in energy policy circles are recognizing that the best way to combat an external border carbon tax might be to get on board with a meaningful climate policy. “The President has an activist trade agenda,” says Alex Flint, executive director of the Alliance for Market Solutions, a Republican group that supports a carbon tax. “European moves on a carbon tax may soon be an important factor the Administration has to consider and may accelerate the need for Republicans here to develop their own views on greenhouse gas limitations.”

Still, before any such challenge, the European Commission has sought to strike a conciliatory tone even as they prepare a policy that could be detrimental to many of its trading partners. “I would expect a very significant engagement on this side of the Atlantic,” said Ditte Juul Jørgensen, director-general for energy at the European Commission, during a February trip to Washington where she met with officials in the Trump Administration and spoke to various energy leaders outside government.

Several groups in Washington are pushing for the U.S. to get ahead of the Europeans’ plan by implementing its own carbon tax, along with an adjustment at borders. Such a move would make U.S. businesses more competitive on the global stage as countries increasingly demand more energy-efficient products, advocates say. Supporters of such an approach include a conservative group, the Climate Leadership Council (CLC), which is backed by some of America’s biggest companies, green groups, economists and Republican elder statesmen. “This really creates an incentive for other countries to say, ‘yeah, I want to get inside that club,'” says former Federal Reserve Chair Janet Yellen, who supports the CLC.

The notion of implementing a carbon tax in the U.S. has a long list of supporters, but still actually enacting it remains an uphill battle. Still, U.S. businesses will soon start feeling the effects of the EU’s border carbon tax, and that might be just the motivation that the foot-dragging U.S. needs to finally get in gear.

Climate change: Put a price on carbon pollution, then refund the money to consumers

Carbon tax proposal has backing from Republican luminaries and is more likely to achieve common ground than the most sweeping 'Green New Deal'

Editorial Board, USA Today, Feb. 19. 2020

The warming world got a whisper of encouragement last week: The amount of heat-trapping carbon dioxide gushing into the atmosphere leveled off in 2019.

That was the good news. The bad news: Last month was the globe's warmest January on record. Antarctica recently saw what is likely its highest temperature ever recorded. And the concentration of CO2 in the atmosphere reached a new peak of 414.3 parts per million.

To prevent further catastrophic changes in the world's climate, greenhouse gas emissions have to be slashed in the decades ahead. How to do that? One of the most sensible options is to put a price on carbon, then refund the proceeds to consumers.

Gaining bipartisan support

In an era of polarization, the idea is attracting broad political support. A proposal gaining momentum has backing from Republican luminaries (including James Baker and George Shultz), major industries (ExxonMobil and Ford) a former Federal Reserve chair (Janet Yellen) and key leaders in the fight against climate change (former Obama Energy Secretary Ernest Moniz and Christiana Figueres, an architect of the Paris climate accord).

If implemented next year, the plan would tax carbon at the source — such as refineries, mines and wells —  at $43 a ton. It would immediately double the price of a ton of coal, tax natural gas at $2.28 per thousand cubic feet and increase gas prices by 38 cents a gallon. A family of four would get a $2,000 rebate to help offset increases in energy costs.

This approach would drive innovation without the burden of regulations, particularly on industrial polluters. Fee credits would also be granted for new ways of storing or reusing carbon. Because carbon polluters could no longer use the atmosphere as a free waste dump, the plan would make green energy alternatives more competitive with fossil fuels.

The tax would increase annually to ensure emission-reductions goals are met. If they're not, the fee would escalate. To ensure that the United States isn't the only nation realigning energy production, the proposal would set border fees — tariffs, actually — on imports produced by dirty energy. 

The plan recognizes that a carbon tax won't, by itself, prevent global warming. As a result, a Climate Leadership Council spokesman says, the proposal would not replace vehicle emission standards and appliance efficiency requirements. (This isn't explicitly stated in the published plan, perhaps a reflection of how difficult it is for this broad-based group to strike a balance.)

Invest in environmental technology

Putting a price on carbon is an idea whose time might finally be arriving. Last year, a small group of House Republicans introduced a carbon tax measure that would start at about $40 a ton, with revenue earmarked for improving highways, climate adaptation and energy research.

Even a carbon tax wouldn't address the need for federal investment in better ways for extracting the carbon accumulating in the atmosphere and lingering for centuries. That could include reforestation, improved carbon-capturing agricultural processes and technology for pulling greenhouse gases directly from the air. 

International climate experts say the world must reduce carbon emissions dramatically within the next decade and reach net zero by midcentury. A carbon tax would be a vast improvement on the status quo, one far more likely to achieve political common ground than the most sweeping "Green New Deal" proposals.

If global emissions have finally peaked, it is only the end of the beginning of this climate crisis. The beginning of the end is yet to come. 

Common-sense, planet-saving reform

Democrats and Republicans should embrace a carbon dividend.

Editorial, The Washington Post, Feb. 13, 2020

CLIMATE CHANGE was the most important issue for a quarter of voters in the Democratic primary in New Hampshire on Tuesday; only health care ranked higher, according to exit polls. Every serious Democratic candidate has a plan. Even some Republican politicians, their science-denying president notwithstanding, are concluding that action on climate is essential for their political survival as well as the planet’s well-being.

But what action? Sometimes we seem to face an unpalatable choice among President Trump’s obstruction and backsliding, feel-good Republican Band-Aids (let’s plant a few trees!) and the overweening, inefficient and ultimately unrealistic overreach of the Green New Deal. So there’s reason to celebrate the release Thursday of a climate plan by an alliance of corporations, environmental advocacy groups, economists and prominent citizens that bills itself as “the broadest climate coalition in U.S. history.”

The coalition includes giant oil companies such as ConocoPhillips and ExxonMobil, utilities (Exelon) and car manufacturers (Ford, General Motors) but also the World Resources Institute, Conservation International and the World Wildlife Fund. It has luminaries from Republican administrations, including former secretaries of state James A. Baker III and George P. Shultz, and Democratic ones, such as Janet L. Yellen, President Barack Obama’s appointment as Federal Reserve chair, and Steven Chu, Mr. Obama’s energy secretary.

What unites them is a plan that is more ambitious and effective in carbon reduction than Mr. Obama’s energy plan or the Paris accord; doesn’t increase the deficit by so much as a dime; leaves most Americans financially better off; encourages innovation; and provides an incentive for other emitters, including China and India, to act. How is that possible? The plan would levy a steadily rising tax on carbon (oil, gas, coal) to cut U.S. carbon emissions in half from 2005 levels by 2035. The timeline is aggressive — steep cuts, and soon — and there’s a backstop if they don’t materialize.

Such a tax is the best way to promote innovation, Ms. Yellen told us, and encourage firms and consumers to switch to cleaner energy (though the government would still be wise to invest in research to speed the transition). The government would remit all of the tax receipts in equal shares; a family of four would get a $2,000 dividend check every year. Seventy percent of households would get more back than they would pay in higher energy costs, with the poorest faring best.

Two other key features: The plan would impose a fee on imports from countries without comparable plans. That would keep companies from just moving factories to countries where they could emit more — and it would encourage other nations to join what would quickly become a customs union of lower emitters. And the carbon fee would replace most federal energy-sector regulation, though automobile standards, appliance efficiency regulation and state rules (if states so chose) would be retained.

That deregulation will offend advocates who would rather dictate the mix of solar, wind and other renewables to be attained. But, as long as the price continues to rise, a tax is a more efficient, predictable route to wringing carbon out of the system than bureacratic fiat could ever be. In short, the only reason for a Republican to oppose this plan is that there’s nothing here for a Democrat to dislike, and vice versa. Congress should find its way past that obstacle to embrace common-sense, planet-saving reform.

CLIMATE CHANGE'S SURPRISE TWIST

By Amy Harder

Axios, Jan. 27, 2020

The economics, politics and science of climate change are converging and catapulting this problem from a joke among critics to a prominent concern.

Driving the news: Shifts across Washington, D.C., among corporate leaders and within financial institutions are creating a foundation that could produce big movement on this problem for the first time since, well, forever.

Why it matters: If the world’s political and business leaders are going to seriously move to cut heat-trapping emissions, they first need to pay attention to the problem. They are starting to now, fueled by unrest from the world’s youth, cheaper renewable energy, more bouts of extreme weather and other evidence of global warming itself.

The big picture: We’ve written about these shifts individually here and here and here over the past year or more. It’s worth examining them together as a whole because the amount of new attention on climate that’s occurred in a matter of weeks is staggering.

  • Big caveats exist and the prospect of substantive action on the problem remains deeply uncertain, but the arc of change is forming.

In Washington, congressional Republicans and even President Trump are scrambling to acknowledge the problem after years of denying it — and in some cases mocking it outright.

  • At the World Economic Forum in Davos last week, Trump announced the U.S. would support an initiative to plant trees — natural ways to capture carbon dioxide emissions — even as he slammed climate activists as “prophets of doom.”

  • For the first time ever, the House GOP leadership is pushing policies to address the problem.

  • These policies, in and of themselves, aren't nearly enough to sufficiently tackle the problem, but the shift in GOP rhetoric over just the past year has been stark.

  • Flat-out denialism of humans' role in warming the planet has all but disappeared.

“The issue of climate and the environment is rising in priority for the American voter and you’re seeing the political dynamic shift where people are really demanding their elected officials to address this problem,” Rep. Tom Reed (R-N.Y.) told me last week.

Among corporate executives and financial leaders, climate change is quickly becoming a concrete worry. In addition to it being the sole official topic of the World Economic Forum last week in Davos for the first time, pronouncements on the matter have come from the following entities in just the last several weeks:

These pronouncements — which, by the way, are mostly just rhetoric for now — aren’t coming out of the goodness of the hearts of the rich and powerful. They're coming from a messy mix of activist and investor pressure and an increasing awareness that as extreme weather becomes more common, its economic toll could too.

Skeptics of this newfound attention to climate change among corporate leaders point to a survey released last week in Davos showing that the topic didn’t even break the top 10 list of risks company CEOs say they’re facing.

  • This highlights the inherent mismatch of a risk like climate change that unfolds over decades, if not centuries, and the challenges facing publicly traded companies trying to turn quarterly profits.

  • That’s why right now we’re seeing stronger rhetoric from money managers and financial institutions whose missions are more rooted in longer term risks.

But, but, but: All this does not necessitate a path to big global action to curb emissions. It lays the foundation for that, but a lot more would have to happen to make actual change possible.

  • Goals from corporate and financial entities deserves close and frequent scrutiny for how much is substantive and how much is extra-heavy greenwashing.

  • Trump continues to roll back climate policies, and the Paris Climate Agreement's goals are in serious doubt.

Another big caveat is that although climate change itself poses huge risks, aggressively acting on it does too — and those risks are realized far more quickly and thus may have swift political consequences hindering more action.

  • For example, when energy prices rise, especially when it happens quickly, populations have shown to respond angrily. I’ve called this the big climate disconnect.

What I’m watching: The levers that could incite change — namely, big government policy — from this newfound foundation of attention, including this one:

  • To what degree the current economic status quo of corporate profits becomes threatened seriously enough that businesses really start to lobby Congress for new policy. Big action on climate change is never going to come from pure altruism or activism; an existing economic reason must exist too.

Big Business Says It Will Tackle Climate Change, but Not How or When

In Davos, business leaders were newly vocal about the danger, though they gave few details about how they would reform their practices.

By David Gelles & Somini Sengupta

NY Times, Jan. 23, 2020

DAVOS, Switzerland — Business titans who for decades brushed off warnings about climate change arrived at the annual World Economic Forum this week ready to show their newfound enthusiasm for the cause.

Having previously played down the need for the reform that scientists had urged, finance leaders and company chiefs conspicuously rallied around a consensus that accelerating global temperatures pose a significant risk to society — and to business.

Missing, though, was a clear answer to the question of what exactly they would do about it and how quickly.

“It’s an increase in rhetoric, absolutely,” said Alison Martin, who leads the Europe, Middle East and Africa divisions of Zurich Insurance. “Will we see a walking of the talking? The jury is out.”

After months of global climate protests that drew millions of young people, a raft of companies said this week in Davos that they would aim to lower their emissions of planet-warming gases to net zero by 2050 or earlier. A coalition of major financial institutions, representing $4.3 trillion in assets, said it would take steps to minimize carbon-heavy investments in its portfolios and lobbied other investors to join it.

A group of 140 of the world’s largest companies pledged to develop a core set of common metrics to track environmental and social responsibility. And companies and government leaders, including President Trump, who has rolled back dozens of environmental and climate policies, said they would aim to plant one trillion new trees around the world, at the behest of Marc Benioff.

“The tree is a bipartisan issue,” said Mr. Benioff, a co-founder and the co-chief executive of Salesforce. “No one is anti-tree.”

The window of time to avert the worst impacts of climate change is rapidly closing, according to numerous scientific reports. And while critics blame big business for decades of inaction, as well as the active suppression of climate science, many major companies now acknowledge the immediate need for change.

“The measurements all show that we are clearly not doing enough yet,” Feike Sijbesma, the chief executive of DSM, a Dutch health company, said at Davos.

The pledges were the latest in a string of climate-related announcements in recent weeks.

BlackRock, the world’s largest institutional investor, said it would place climate change at the center of its investment strategy. Microsoft said it would not only go carbon negative — reducing more greenhouse gases than it adds to the environment — but also somehow remove all the emissions the company has ever produced. Lloyds, the British financial group, pledged to cut by “more than 50 percent” the carbon emissions generated by the projects it finances by 2030.

Larry Fink, BlackRock’s chief executive, showed up to meetings wearing a wool scarf that represented the decades of warming since the industrial age, a Christmas present from a nonprofit organization that works on climate issues.

“I’ve never seen a social issue explode like this,” said Paul Tudor Jones II, the investor and founder of Just Capital, which ranks companies based on sustainability factors. “Every single C.E.O. and board is having to figure out what their carbon footprint is and what they’re going to do about it.”

Behind this flurry of corporate commitments is a growing concern about tangible risks to the bottom line, including the prospect that ratings agencies will factor in climate risk, pressure from younger employees, changing consumer preferences and government regulations like a carbon tax.

Extreme weather events are already causing economic havoc. The California wildfires last year were estimated to have caused $25.4 billion in damage. Pacific Gas & Electric, the largest energy producer in the state, has filed for bankruptcy.

Jesper Brodin, the chief executive of Ikea, said his company was already feeling the impact. Severe flooding in the United States temporarily closed many of its stores. Energy prices in Sweden skyrocketed during a recent heat wave. Fires in Australia have disrupted business there.

Arne Sorenson, the chief executive of Marriott, said the hotel chain was also feeling the brunt. “We have hotels in Puerto Rico that are still closed,” he said. “We’re going to see the impact of fires and storms.”

A report this week from the Bank for International Settlements, which represents central banks, said climate change could cause the next financial crisis. Mark Carney, the departing Bank of England governor who has spearheaded efforts to get central banks to carry out stress tests assessing climate impacts on sectors, said companies needed to examine and disclose their strategies and timelines for lowering their carbon footprints.

“This is a whole-of-economy transition. In every sector, there will be companies that will be part of the solution,” Mr. Carney said. “Those who lag are going to be punished.”

Despite talk of the risks, few companies and investors provided details at Davos on how they would rapidly transition away from an economy based on fossil fuels. Just a fraction of global businesses currently disclose the financial risks posed by climate change. Even fewer have set their own targets and timetables to do what the science demands: Reduce total greenhouse gas emissions by half over the next decade.

While global investment in renewable energy hit $289 billion in 2018, far exceeding the investment in new fossil fuel power, wind and solar remain a small portion of total energy production.

Ms. Martin, of Zurich Insurance, said the real evidence of change would come when investors started exiting carbon-heavy companies, especially those with no transition plan. “What is going to cause the change?” she added. “If capital actually does start to fly, if it does actually make choices.”

Treasury Secretary Steven Mnuchin ridiculed calls for fossil fuel divestment, singling out the teenage climate activist Greta Thunberg, who called on the Davos crowd on Tuesday to immediately halt investments in oil, gas and coal.

Speaking to reporters on Thursday, Mr. Mnuchin belittled Ms. Thunberg. “After she goes and studies economics in college, she can come back and explain that to us,” he said.

Ms. Thunberg responded tartly on Twitter, saying that “it doesn’t take a college degree in economics to realise that our remaining 1.5° carbon budget and ongoing fossil fuel subsidies and investments don’t add up.”

Mr. Mnuchin also played down the need for new regulation. “We don’t believe there should be carbon taxes,” he said on CNBC. “We want to cut taxes. We think that industry can deal with this issue on its own.”

The World Economic Forum’s annual global risk report this year ranked climate and environmental hazards as the top five concerns facing the world in the next decade for the first time. But a separate survey of business executives about the top 10 risks in the next 12 months made no mention of climate.

One measure of a newfound awareness, said Stefan Rahmstorf, a climate scientist at the Potsdam Institute for Climate Impact Research, was how many invitations that researchers like him were now receiving from the titans of global capital. Dr. Rahmstorf said that while he was frustrated that the business community had for decades blocked efforts to address rising greenhouse gas emissions, he was also hopeful about the change he was witnessing.

“The business community is increasingly not trying to lobby against decarbonization and solving the climate crisis,” he said. “They are realizing something has to be done and something has to change.”