The New Climate
It’s time for an approach to global climate policy that can win bipartisan support, create effective long-term incentives for energy innovation, and use the strength of the market to curb the effects of climate change on a global scale.
Virtually all knowledgeable economists and policy experts agree that the cheapest and most effective way to reduce carbon is to put a price on it. Doing so would make all business and personal investment and consumption decisions reflect the anticipated external costs to society of associated carbon emissions.
Most Americans in both parties agree that climate change is a problem that we ought to face head-on. Now is the time for a free-market, pro-growth climate solution.
The Facts about Carbon Pricing
A carbon fee could generate significant revenue.
- $1 trillion from a $25/metric ton of CO2, increasing a real two percent per year, according to the Congressional Budget Office.
- $2.2 trillion over 10 years from a $49/metric ton of CO2 rising at a real two percent per year, according to the U.S. Treasury.
Economists agree that pricing carbon is the most effective response to climate risk.
- The atmosphere’s capacity to absorb greenhouse gas emissions is a scarce resource.
- Each year we delay action on climate, the cost to society of addressing the issue goes up.
- Pricing carbon reduces emissions faster than regulation.
By putting the market to work, Congress could provide carbon regulatory certainty.
- President Trump’s attempt to roll back the Clean Power Plan faces a significant legal challenge, and it is unlikely to stick – a new administration could reregulate.
- With an environmental backstop, a fee starting at $25/metric ton of CO2 would meet our Paris commitment and would have a far bigger impact than any regulation.
- Such policy could render Clean Air Act point-source CO2 regulation unnecessary.
Pairing a carbon fee with pro-growth policy could create jobs and address climate risk.
- Half the revenue raised could be invested in much-needed infrastructure.
- The remainder could strengthen low- and middle-income families and protect coal communities.
- With a modest fee, we could reduce emissions 28% relative to 2005 levels by 2025.