A carbon tax is key to addressing the climate crisis — and carbon dividends could get Congress to support one

Providing carbon dividends to every resident transforms the cod liver oil of a new tax into a milkshake that most Americans would happily consume for years to come.

Op-ed by James Hansen and Jonathan Marshall, The Boston Globe, Sept. 8, 2021

As severe storms ravage the country from Louisiana to Massachusetts and wildfires consume forests and homes in the West, Congress must not fail to include in the pending budget reconciliation bill comprehensive steps to curb the climate crisis that threatens us all with even worse calamities.

However, President Biden’s ambitious goal of slashing greenhouse gas emissions 50 percent by 2030 cannot be achieved by piecemeal subsidies to promote cleaner energy — electric cars and the like ― as long as dirty fossil fuels enjoy subsidies estimated by the International Monetary Fund at more than $600 billion annually.

The vast bulk of those subsidies represent the unpriced cost to humans of burning fossil fuels: climate disruption and the health effects of air pollution. Any serious climate program must eliminate them without causing economic havoc.
Fortunately, several such programs are immediately at hand. Three pending climate bills would achieve Biden’s bold climate targets, satisfy budget reconciliation criteria, and meet the all-important political criterion of achieving public support.
The Energy Innovation and Carbon Dividend Act (H.R. 2307), America’s Clean Future Fund Act (S. 685), and the Save Our Future Act (S.2085), all share two key provisions: a predictably rising fee on polluting fossil fuels and a partial or full return of revenue to every American.

Their first feature is the most familiar. An unprecedented 3,623 US economists from across the political spectrum, including 28 Nobel laureates, have declared that “a carbon tax offers the most cost-effective lever to reduce carbon emissions at the scale and speed that is necessary.”

The second feature of these bills, known as the “dividend,” is the key to helping members of Congress protect their constituents’ physical and economic well-being without being branded “pro-tax” by opponents.

As Treasury Secretary Janet Yellen has argued, “the most politically viable way” to build support for a tax on carbon polluters is by earmarking the revenues to make most American voters better off right away — even before its climate benefits start to show. Providing “carbon dividends” to every resident transforms the cod liver oil of a new tax into a milkshake that most Americans would happily consume for years to come.

Analyses by the US Treasury, Columbia University, and other research centers agree that returning carbon tax revenues in the form of equal dividends to every individual provides net financial benefits to roughly two-thirds of Americans, while still motivating them to reduce their carbon footprint. These benefits supplement the huge but less immediately tangible benefits from mitigating climate disruption and deadly air pollution.

This approach appeals to many conservatives as well as progressives.

Two dozen Utah Republican politicians recently stated, “We support a carbon dividends approach that puts a fee on carbon emissions and returns all the money to the American people in dividend checks. This approach does not require heavy-handed government oversight. The fee gives the markets an incentive to move to cleaner technologies, while the dividend protects families from the effect of higher energy prices. Most families should come out financially ahead, and they will be rewarded for reducing emissions however they choose.”

Economist James Boyce, author of “Economics for People and the Planet,” has made the progressive case that “carbon dividends would help to mitigate the problem of wide and rising income inequality. At the same time, universal dividends can help to foster an ethic of shared interests and shared responsibilities in an era when divisiveness is emerging as a peril to pluralist societies.”

Dividends from a $50-per-ton carbon tax would raise the net income of the bottom tenth of income earners by nearly 9 percent, according to a US Treasury study. Smaller gains would accrue to middle-income households. Most Black, Latino, and Asian American families would also benefit.

Most voters already grasp these benefits. US opinion polls consistently show support from 60 to 70 percent of voters for a tax on fossil fuel companies coupled with carbon dividends.

Few climate policies would be so effective as economy-wide carbon fees. Few if any climate policies would so immediately improve the welfare of ordinary Americans and win political support as carbon dividends. Carbon fees and dividends should be a central part of any climate policy in the upcoming reconciliation bill.

James Hansen is director of the Program on Climate Science, Awareness and Solutions at Columbia University Earth Institute. Jonathan Marshall is former economics editor of the San Francisco Chronicle and cofounder of the Economics Policy Network of Citizens Climate Lobby.

https://www.bostonglobe.com/2021/09/08/opinion/carbon-tax-is-key-addressing-climate-crisis-carbon-dividends-could-get-congress-support-one/?et_rid=1745350245&s_campaign=todaysheadlines:newsletter

Biden Opens New Federal Office for Climate Change, Health and Equity

The office will be the first government effort to focus specifically on the public health dangers of global warming.

By Lisa Friedman, The New York Times, Aug. 30, 2021

WASHINGTON — Amid deadly heat waves and new evidence showing that wildfire smoke may contribute to premature births, the Biden administration is creating a new federal office to address the health consequences of climate change and their disproportionate effects on poor communities.

The Office of Climate Change and Health Equity, which the administration announced on Monday, will be the first federal program aimed specifically at understanding how planet-warming greenhouse gas emissions from burning fossil fuels also affect human health. It will fall under the Department of Health and Human Services.

It’s an area that medical experts have urged the government to take more seriously, and public health leaders said the new office was long overdue.

“The health of the American people is falling through the cracks because there hasn’t been a targeted focus on climate risk,” said Aaron Bernstein, interim director of the Center for Climate, Health and the Global Environment at the Harvard T.H. Chan School of Public Health. “This is the opportunity to plug that hole.”

In 2009, scientists warned in the medical journal The Lancet that global warming would harm crop yields, cause tropical diseases to show up in new parts of the world and lead to water shortages. In 2020, the journal said those threats no longer belonged to the distant future.

“Climate change is fundamentally a health threat,” said Gina McCarthy, the White House national climate change adviser. She said part of the mission of the office would be to encourage doctors to talk to their patients about protecting themselves from things like heat waves, wildfire smoke and other air pollution.

In particular, experts said, more needs to be done to understand how extreme weather affects older people as well as communities of color, where families are more likely to live in areas hardest hit by disasters.

“There’s a saying that if white people catch a cold, Black people catch pneumonia,” said Beverly Malone, chief executive of the National League for Nursing. “Health equity has a lot to do with where you live, and we have understood the linkage.”

President Biden has requested $3 million to fund the climate office next year, a sum that still requires congressional approval. Those setting up the office have been brought in from other agencies drawing on existing funds. John Balbus, the senior adviser to the director of the National Institutes of Health on climate change, will serve as interim director.

https://www.nytimes.com/2021/08/30/climate/biden-climate-change-health-equity.html?utm_source=newsletter&utm_medium=email&utm_campaign=newsletter_axiosgenerate&stream=top

We could cut carbon emissions tomorrow — if we really wanted to

Column by Fareed Zakaria, The Washington Post, Aug. 12, 2021

To understand the tension in the United States’ energy policy, consider the events of this week. On Monday, the United Nations released a new report warning that climate change is coming faster than predicted and that the world is losing time to act. President Biden tweeted in response, “We can’t wait to tackle the climate crisis.” Two days later, his national security adviser, Jake Sullivan, urged Saudi Arabia and other major oil producers to increase production of petroleum beyond the agreed-upon targets. Biden backed him up. The Financial Times wrote this headline: “Biden to OPEC: Drill, baby, drill.”

America’s energy policy reflects one of the oldest attitudes in human history. As Saint Augustine once prayed to God, “Make me chaste and celibate — but not yet.”

The White House this week illustrated the central reason U.S. energy policy is failing. It promises that we can get to a carbon-free future without imposing real costs on the American people, and without having to make some very difficult trade-offs.

Let’s start by recognizing some basic facts. In 1990, fossil fuels made up about 85 percent of U.S. energy consumption. That number today? Around 80 percent. And according to the U.S. Energy Information Administration, in 2050, under current policy, that percentage will have dropped to about 75 percent.

The reasons for this are not simply that oil companies are influential. Fossil fuels are amazingly abundant and versatile. They are powerful and portable, providing energy whenever and wherever it’s needed. That is why we use fossil fuels to run our cars, power our factories, cook our food and heat our homes. Plus, we use them to make everything from plastics to textiles to aspirin.

This is not an argument to do nothing. On the contrary, it’s an argument to do much more. The only rational way to lower the use of fossil fuels in all of these varied applications is to make them all more expensive. That means a carbon tax, so that everything that emits greenhouse gases becomes more expensive and everything that is clean becomes more affordable.

But that’s not enough. We keep proclaiming lofty climate goals and yet never meet them. In 2015, President Barack Obama announced targets for reducing U.S. emissions by 2025. Many regarded those goals as not nearly ambitious enough. Thanks to President Donald Trump, we are not on track to achieve them. Now Biden has set even more ambitious goals.

The biggest problem in U.S. energy policy is climate denialism from the right. But on the left, there is another potent danger: magical thinking. Too many believe we can lower emissions with no hard choices.

The University of California at Berkeley released a report last year that says we could feasibly get to a 90 percent clean electricity grid by 2035, reducing coal consumption to zero and natural gas by 70 percent. But note — that wildly optimistic scenario is based on the assumption that the United States would quickly and massively upgrade its power grid to become smart and responsive, build new transmission lines, expand storage dramatically, and change the way power systems operate across the 50 states. In reality, just building a single new transmission line has often proved an impossible task. One recent effort to build lines from renewable energy projects to population centers collapsed after 10 years of battles over permits. There is another continuing battle over a line to bring Canadian hydropower into New England.

We should continue to subsidize renewables. We should fund new technologies — from hydrogen fuel to electricity storage — that, in a decade or two, might prove extremely effective substitutes for fossil fuels. There are ways to expedite upgrading the grid. But meanwhile, we need to reduce emissions sharply, and now. Here’s what we could do right away.

First, stop retiring nuclear power plants and start building new ones. Nuclear power is a zero-emissions fuel that is always on.

Second, we need to get coal — the dirtiest fuel — from 20 percent of our electricity supply down to zero. Where possible, we should replace it with wind, solar or biomass. But the easiest, quickest way will often be to use natural gas, which still produces half the carbon emissions. We should also get the developing world to stop building coal-fired plants, many of them Chinese-sponsored, and instead help them build power plants to run on U.S. natural gas.

Third, electric cars have come of age and can replace internal combustion vehicles, and we should speed this transition by building out thousands of charging stations.

Fourth, industry releases about a quarter of U.S. greenhouse gas emissions and is hard to decarbonize. (Very high heat is often needed, and some chemical processes unavoidably release carbon dioxide.) So we should require the use of currently available carbon-capture technologies, including a massive expansion of the oldest one we know of: trees.

Yes, I know there are problems with all of these approaches, but there are problems with every solution. (Producing solar energy on an industrial scale requires massive use of plastics, i.e. petrochemicals, as well as the mining of many raw materials, including scarce minerals.) But the actions I describe here would all cut emissions tomorrow. Not 10 years from now, and not after development and research. Tomorrow.

So the question really is this: Do we want to cut carbon emissions tomorrow?

https://www.washingtonpost.com/opinions/2021/08/12/we-could-cut-carbon-emissions-tomorrow-if-we-really-wanted/

Exclusive: Strange bedfellows come together on EV charging

By Andrew Freedman, Axios, August 11, 2021

A new initiative from a diverse array of groups from the Natural Resources Defense Council (NRDC) to the Edison Electric Institute and major automaker trade organizations is launching Wednesday.

What to watch: Its goal is to mobilize private capital and forge public-private partnerships to rapidly accelerate the deployment of electric vehicle charging stations and related infrastructure nationwide.

Why it matters: The group, known as the National EV Charging Initiative, counts among its members electrical workers who will help supply and install the infrastructure to power EVs as well as advocates who are focused on addressing racial, economic and environmental inequities.

Between the lines: The 24 signatories of the MOU include some strange bedfellows, including unions, electrical utilities and environmental groups that have sparred in the past over other issues.

• They include the Alliance for Transportation Electrification, which counts GM, Ford and Honda among its members.

• Also part of the new push is the Alliance for Automotive Innovation, which has on its membership roster BMW, Ford, Mazda, Nissan and Toyota, and the nonprofit group Veloz, which brings in PG&E, Uber and Lyft.

• There's also The Coalition for Green Capital, Ceres, CALSTART, the California Electric Transportation Coalition, Environmental Defense Fund, Sierra Club, International Brotherhood of Electrical Workers, and Green Latinos, among other signatories.

How it works: The MOU acknowledges "the need for collaboration between policymakers at all levels of government, fleet owners, organized labor, electric utilities, and financiers in order to build out EV charging infrastructure."

• According to Colleen Quinn, the founder and partner of eMobility Advisors, a public affairs firm that is spearheading the initiative on behalf of NRDC, the U.S. needs to mobilize both public and private funding to get to President Biden's goal of having 50% of vehicles sold in the U.S. in 2030 be electric vehicles.

• The bipartisan infrastructure plan that passed the Senate on Tuesday includes $7.5 billion to fund the construction of EV charging stations.

What they're saying: "We're bringing the entire utility industry together, so you've got the manufacturing of the vehicles, you've also got, you know, basically the new, the new fueling providers, which is in the utility industry," Quinn told Axios.

Of note: The initiative has an environmental justice component, with member groups dedicated to bringing EV charging to areas that are more affected by pollution and to people who "spend a disproportionate share of their income on vehicle fuel and maintenance."

Yes, but: It's unclear how much money NRDC and other member groups will direct toward this effort to lobby federal and state governments, which will help determine whether this is successful.

Striking a balance on climate change and global trade

Op-Ed by James Bacchus, The Hill, July 19 2021.

Last week when the European Union announced plans to impose the first trade restrictions in the world for climate reasons, congressional Democrats announced they will propose similar restrictions as part of their pending $3.5 trillion spending plan. As a former Democratic member of Congress, I have noticed that while the Europeans are specific in what they are seeking, the Democrats are only beginning to consider what precisely they will propose, and whether and how it will be structured to pass muster with the World Trade Organization. 

The European proposal for a “carbon border adjustment mechanism” will impose a border levy on imported products that emit more carbon than like products that are made in the EU under tougher emissions standards. This proposal is detailed in the EU’s 291-page “Green Deal.” The EU aims to be carbon neutral by 2050, and it sees the CBAM as a key to achieving that goal. The EU insists that the proposal is consistent with its WTO obligations. Legally, though, saying does not make it so, and whether the proposed EU measure will turn out to be legal under international trade law is an open question. 

In contrast, for now, the Democrats’ proposal does not go much beyond labeling what they are envisaging as a “polluter import fee.” President Joe Biden’s goal is a 50 percent reduction in U.S. carbon emissions by 2030, as compared to 2005 levels, and the Biden administration has expressed support for the notion of a “polluter import fee” as one means of achieving that goal. Yet another open question is whether the Democrats will make a genuine effort to try to shape their legislation to comply with U.S. obligations under the WTO treaty and, if so, whether they can succeed in such an effort. 

My former colleague in the House, Sen. Edward J. Markey (D-Mass.),  long an ardent champion of climate action, has explained, “The United States and the EU have to think in terms of the leadership that we can provide and the message that we have to send to China and other countries that would take advantage of the high standards that we are going to enact.” Agreed. But will this message from the U.S. be one of taking climate action within the WTO trade rules we Americans helped write and have pledged to uphold, or will it be one of taking climate action outside those rules?

The EU proposal may do little in and of itself to curb emissions. The United Nations Conference on Trade and Development projects that it would cut global carbon dioxide emissions by only 0.1 percent. The Bertelsmann Foundation in Germany predicts a cut of only 0.2 percent. The Europeans know this. Their professed principal aim in announcing the first-ever climate-related trade restrictions is to spur their trading partners who have not taken comparable climate actions to join them in doing more, starting with promising to do more and do it sooner in the runup to the next global climate summit in November in Glasgow.

The Biden administration and congressional Democrats share the same aim. By enacting similar trade-related climate restrictions, the U.S. and the EU, through the weight of their combined economies, will surely add to the paltry percentage of emissions cuts predicted now for the EU CBAM alone. But will they have the economic leverage together to inspire many other countries in the world to shift away from their current levels of carbon-dependence? Or would such a shift be more likely to result from focusing more on the increased global cooperation that the EU and the Democrats alike routinely and rightly espouse?

In theory, climate-related restrictions on trade can be crafted to comply with WTO rules, and such restrictions, if they fall within those rules, could help send a price signal that would encourage less reliance on fossil fuels in other countries. That price signal would work best if it were market-based and not sent merely by governmental mandates and subsidies, which could run afoul of WTO rules. If reducing carbon emissions is the goal, that goal would best be achieved by a market-based approach such as a carbon tax.

A carbon tax would have the best chance of falling within the boundaries of WTO rules, which have long permitted border adjustments for indirect taxes on traded products. Of course, domestic politics on both sides of the Atlantic Ocean pose obstacles to a carbon tax. And neither the Europeans nor the Democrats seem much inclined to try to overcome those obstacles by proposing a carbon tax, despite their advocacy of urgently addressing climate change. (While in Congress, I voted for a carbon tax in 1993.)

In identifying and crafting some alternative approach that could be within the WTO rules, my experience since then in judging dozens of WTO trade disputes tells me the Democrats would be well advised to eliminate all considerations of economic motivation from their vocabulary. They should not speak about preserving economic competitiveness as a reason for their proposed actions, and they should halt all talk of “carbon leakage” — the widespread apprehension that imposing higher emissions standards in the U.S. would cause production (and emissions) to shift offshore. 

To date, there is little empirical evidence of carbon leakage. As carbon prices increase, carbon leakage may become more of a real concern. But structuring a border levy to prevent the potential loss of economic competitiveness — even if that levy is also enacted for climate reasons — would make it look much more like green protectionism and much less like a real climate measure that could survive legal scrutiny by the WTO. 

If what the Democrats are contemplating is truly a climate measure, then its best chance of being upheld by the WTO is if it is structured exclusively as a climate measure and is based solely on climate motivations. It must also be applied to all U.S. trading partners in an evenhanded way that does not constitute arbitrary or unjustifiable discrimination or a disguised restriction on international trade. In part, this means providing our trading partners with what we Americans call “due process” before imposing climate-related trade restrictions on their products.

Not least, it is difficult to see how, consistently with its obligations under the WTO treaty, the United States could impose a fee on the “pollution” caused by imported products without imposing an equivalent fee on the “pollution” caused by competing domestic products. The Europeans can point for justification to their Emissions Trading System. There is — thus far — nothing comparable in the United States.   

The European Union intends to take at least two years to try to get its measure right under the WTO rules before applying it. The Democrats should do the same — if they decide that applying such a restriction on trade is in fact the best way to accomplish their climate goals. 

James Bacchus is an adjunct scholar at the Cato Institute and a professor of Global Affairs at the University of Central Florida. He is also a founder and former chairman of the WTO Appellate Body and a former Democratic member of Congress, from Florida. His next book, “Trade Links: New Rules for a New World,” will be published by Cambridge University Press in early 2022.   

https://thehill.com/opinion/energy-environment/563680-striking-a-balance-on-climate-change-and-global-trade

The smart way to reduce emissions and outmaneuver our rivals

Op-ed by James A. Baker III & Greg Bertelsen, The Washington Post, July 4, 2021

One thing has become crystal clear during the long-running debate about climate change: Most nations won’t risk their own economic well-being in the hope of reversing what is clearly a global problem.

And it would be a mistake for the United States to do so without adopting a plan that compels other large carbon-emitting nations to do the same. The Biden administration is right to recognize the risks of climate change, but it has so far failed to come up with a way to ensure against the risk without ceding a competitive advantage to China and other nations. Republicans in Congress are right to worry about U.S. competitiveness. But by failing to meaningfully engage on the climate issue, they are handing Democrats a political advantage and missing an opportunity to strengthen our economy against international rivals.

However, there is an approach that would serve all interests — the interests of Republicans and Democrats, as well as the interest of progress on both climate change and U.S. competitiveness. It lies in leveraging an underappreciated strength of our economy: our success in low carbon-emission production.

A plan co-authored by Secretary Baker and the late George P. Shultz holds the key to placing market pressure on China and other nations to start doing their part. It would place a fee on all carbon emissions in the United States, an approach that most economists believe is the most efficient and effective way to reduce such emissions.

But rather than giving that money to the federal government, all of the revenue from the fee would be returned to Americans in the form of a quarterly dividend. A household of four would receive $2,000 annually, enough to provide the vast majority of households with more money than they would pay in higher energy costs. As a result, this fee would not expand the federal government, and therefore should not be considered a tax.

But it would incentivize the private sector to find new and better ways to reduce emissions. This is a far better route than forcing the United States to wean itself from fossil fuels (while other nations fail to do so) because it harnesses a set of critically important strategic assets of our country: our abundance of affordable and cleaner energy, and our unmatched powers of innovation.

One can almost hear the scoffing from China, India and Russia as the United States attempts to unilaterally restrict its oil and gas production, only to have a growing global demand filled by competing nations that produce fossil fuels with more emissions. And yet climate change can’t be effectively addressed unless most of the other biggest emitters follow suit. As much as some might like, we can’t force these large emitter nations to impose restrictions such as those being considered in the United States.

So, a critical component of our plan is a feature that would rebate to U.S. manufacturers their fees on exports to any nation without a similar carbon program. If any country refused to go along, it would have to pay a penalty to send its goods into the United States. Access to the world’s largest market would obviously put pressure on China and other nations to reduce their own emissions — or pay a surcharge to sell their goods in the United States.

The United States is already in a leadership position on reducing carbon emissions, a fact that is starting to gain attention in both political parties. “China, for example, has just kept emitting more, and done it shamelessly,” Senate Minority Leader Mitch McConnell (R-Ky.) recently said. President Biden’s climate envoy, former secretary of state John F. Kerry, has also noted China’s lackluster record. “They have a massive coal dependency,” he said earlier this year. “We have to try to get them to move further.”

The economic upside here is unmistakable. U.S. steelmakers, for example, are far more efficient in low-carbon production than their major global competitors, according to a recent study commissioned by the Climate Leadership Council. By applying a carbon fee to domestic and imported steel, U.S. industry would win across the board. Overall, the study found, the U.S. economy is 40 percent more carbon efficient than the world average, and nearly every U.S. industrial sector enjoys a carbon advantage over most of our key trading partners.

The European Union is already preparing legislation to charge imported goods for their emissions. Ultimately, we should partner with Europe and our other allies to form a bloc of countries that similarly price carbon. As the world’s largest economy, the United States would best serve our industries by acting first, and establishing new rules regarding global trade and climate policy that are transparent, enforceable and, above all, fair to U.S. industry.

In the global contest that is shaping the 21st century, adopting the Baker-Shultz plan offers a clear-cut and immediate way to outmaneuver U.S. rivals and, at the same time, reduce the risk of climate change in a globally effective way.

James A. Baker III was the 61st secretary of state and 67th secretary of the treasury. Greg Bertelsen is chief executive of the Climate Leadership Council.

https://www.washingtonpost.com/opinions/2021/07/04/baker-shultz-climate-plan-carbon-emissions/