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These US Companies Just Proposed a Carbon Tax to Reduce CO2 Emissions

walker/Flickr.

Today, the Climate Leadership Council (CLC) proposed a federal “carbon tax” to Congress.

In partnership with the World Resources Institute (WRI), the CLC said the proposal offers a bipartisan, market-approved approach toward reducing carbon emissions that will boost the economy rather than harm it.

Advocates have long said a carbon tax is essential to ensuring real action is taken toward reducing climate change, but not everyone — including the American public, oil companies and Congress — was always enthusiastic.

Now, the tides may be turning.

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The WRI/CLC proposal has gained unlikely proponents in some major energy companies. The CLC revealed its list of Founding Members, which included leaders from BP, ExxonMobile and Royal Dutch Shell.

Representatives from the Ronald Reagan and George H. W. Bush administrations, General Motors, Johnson & Johnson, PepsiCo, Proctor and Gamble, and a former Walmart executive are all included in the list of Founding Members.

6222055215_1b29dffca6_z.jpgImage: Takver/Flickr.

“A $40 price per ton on carbon, rising in a predictable way, could be the centerpiece of U.S. action and leadership on climate. WRI analysis suggests it could be good for jobs and good for the climate,” Andrew Steer, President & CEO of WRI, wrote in statement online.

Overall, US support for a carbon tax is still low: just 35% of Americans support it, according to a University of Michigan report. But when the revenue from it goes back to taxpayers, as the CLC proposal demands, public opinion increased to 56%.

A carbon tax is essentially a tax that companies have to pay for the amount of CO2 emissions they produce.

For companies in Europe, where the tax hangs around $20 per ton of CO2, S&P 500 companies would have to cough up a collective $60 to $80 billion each year.

A carbon tax is different from a cap-and-trade agreement, in which a governing body sets a maximum amount of carbon emissions and companies trade carbon emissions tickets amongst themselves.

The proposal from the CLC and WRI calls for a gradually rising, but substantial carbon tax with the revenue going back to taxpayers.  

If priced right, a carbon tax can encourage CO2 emitters to scale back on their emissions and seek alternative, cleaner energy sources. A tax puts the pressure on the companies that not only produce the most carbon emissions but who also have the power to cut emissions.

Program director for the climate initiative New Climate Economy, Helen Mountford, called the carbon tax a “vital piece of the puzzle.”

According to her team’s research, to reduce carbon emissions enough to keep global warming in check, developed countries need to have a carbon tax of at least $75 per ton.

A $40 price per ton on carbon, rising in a predictable way, could be the centerpiece of U.S. action and leadership on climate. WRI analysis suggests it could be good for jobs and good for the climate.

Many countries have used strategies similar to a carbon tax to influence tobacco and alcohol use.

Forty countries and over 20 localities (cities, states and provinces) have some kind of carbon pricing regulation, according to the World Bank.

Read More: How the EU Is Refusing to Let the Paris Agreement Die

In countries like Denmark and Sweden, carbon emissions dropped nearly 25% after implementing a carbon tax.

However, this result is not universal. Norway, for example, has seen an increase in CO2 emissions since launching its carbon tax, even as the Norwegian Environment Agency called the tax the greatest tool in environmental policy.

As the public inches closer to the consensus held by most scientists that climate change is real and humans are the largest contributors to climate change, the debate has shifted to how best to address it.

Part of the problem many opponents have with the carbon tax is exactly what CLC and WRI like about their solution: it’s market-first.

"I would say this is a preview of coming attractions in which a carbon pricing debate might look less like a traditional environmental debate over regulation and more like a battle over taxes and budgeting," Barry Rabe, a professor of political science at the University of Michigan, told Cilmate Wire.

Back in October 2016 when Washington state placed a historic carbon tax on the ballot, environmentalists denounced it, including well-respected environmental groups like the Washington Environmental Council and the Sierra Club.

I would say this is a preview of coming attractions in which a carbon pricing debate might look less like a traditional environmental debate over regulation and more like a battle over taxes and budgeting.

Opponents argued that the proposal of a $25 per ton tax on carbon would not even approach the level required to reduce carbon emissions or pressure the transformative systemic change needed to address climate change.

Some opponents fear that the implementation of a carbon tax will give more fuel for energy companies to fight EPA regulations designed to reduce CO2 emissions and enforce safe energy producing practices.

Read More: US Eliminates Climate Change Office That Helped Other Countries’ Sustainability Efforts

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The CLC and WRI face several obstacles if they want to see their proposal become law, including severe political opposition.

Former President Barrack Obama proposed a $10 per barrel fee on oil back in 2016, which several Republican congressmen declared “dead on arrival.”

The current administration has taken a very different approach to dealing with climate change. President Trump pulled the US out of the Paris Agreement, an international coalition to reduce carbon emissions, and has denied climate change on Twitter. The website for the Environmental Protection Agency (EPA) has also gone dark.

Two of Trump’s top aides have denied humans as the main contributors to climate change. The chief of the EPA, Scott Pruitt, does not believe CO2 emissions are linked to climate change. And on Tuesday, the same day the CLC announced its proposal, U.S. Energy Secretary Rick Perry denied that CO2 is the leading cause of climate change.

The cost of not taking action  to slow climate change is another thing to consider. While it does not take much money to burn fossil fuels, the side effects are expensive.

The economic cost, also called “social cost,” of carbon emissions is $220 per ton, according to research from the journal, Nature Climate Change. The cost stems from agricultural loss, due to events such as acid rain, and decreased human health — resulting in lower worker productivity, among other factors.

While the argument for how to best address climate change and slow global warming continues, the federal carbon tax proposal will surely remain an important part of the story.