A Climate Change Solution the GOP Can Get Behind

– [Narrator] Climate
change is going to be bad. We don’t know exactly how
bad, but general estimates range from pretty bad
to really, really bad. Depending on how you project the growth of carbon concentration in the atmosphere, average surface temperatures could climb five degrees Celsius or higher. This could lead to sea
levels rising over two meters by 2100. Policy makers at the local,
state, and national level have taken some steps to avert the crisis. Renewable portfolio standards
and mileage guidelines for cars have become
popular tools for limiting carbon emissions, but the
consensus among scientists is that much more needs to be done. The problem is there are
few issues as polarizing as climate change. – So it’s very, very cold
out, very unseasonable, so Mr. President, catch this. – [Narrator] But what if
I told you that there’s a policy solution that might
be able to bridge the gap between progressives and conservatives, environmentalists and
businesses, climate hawks and climate skeptics? That policy is called the Great Swap. Let’s take a closer look. This is British Columbia. It’s home to the world’s
biggest hockey stick, the longest unsupported
cable car at 9,921 feet, and it’s one of the only
places in North America with a tax on carbon emissions. British Columbia levies a tax
of $30 for every metric ton of carbon dioxide emitted. For perspective, the
average U.S. household generates 41 metric tons of
CO2 emissions every year. BC’s carbon tax raises
the price of gasoline by about 20 cents per gallon
and it raises electricity prices by about a penny per kilowatt hour. To offset the cost for tax payers, the BC government has
instituted several tax cuts in other areas. This makes their carbon
tax revenue neutral. In other words, all
the money that comes in is paid back to taxpayers. Now BC is a small province
with only 4.6 million people, and its carbon tax has only been in effect for a few years, so
there’s still some debate over how much it has reduced emissions. But advocates for carbon
taxes or carbon pricing believe it could have a
dramatic impact on emissions in the United States. This is the central
premise of the Great Swap, a carbon tax proposal
written by Joseph Aldy. Professor Aldy is from
Kentucky, his favorite movie is “All the President’s
Men,” and he’s an associate professor of public policy
at Harvard Kennedy School. At the heart of Professor Aldy’s proposal is a carbon tax that would
start at $25 for every metric ton of CO2 and increase
annually as businesses and consumers adjust. – The Great Swap is really
premised on two swaps: the first swap is reducing
our taxes on things that are good, like people working and productive investments,
by financing that through taxes on things that are bad like pollution that
contributes to climate change. The second swap is recognizing
that we could be more effective at addressing climate change by putting a tax on the
emissions that contribute to the problem instead of
more conventional approaches through regulations. – [Narrator] When crafting new policies, lawmakers use a carrot and stick approach to encourage good behavior
and discourage bad behavior. A carrot is a reward for
something good or productive. A stick is a punishment for
something bad or harmful. Now I’m not a big fan of
carrots, but let’s pretend like carrots are
objectively good and sticks are objectively bad. In this analogy, the carbon tax would be a stick meant to discourage
the use of fossil fuels. Rather than burning coal or
gasoline, a robust carbon tax would nudge consumers of
businesses to seek out cleaner alternatives like solar. It could also spur investment
in energy efficiency and conservation efforts. The carrot would be the revenue generated by the carbon tax. That money would be paid out to taxpayers either as a reduction in income tax rates or literally as a check
mailed to each taxpayer once a year. One of the reasons that
Professor Aldy and other carbon tax advocates like
this policy is that it’d be relatively simple to do. We already collect data
from energy producers on how much coal they’re
mining or how much oil they’re drilling. Adding tax collection to this process would be administratively simple. The tax payout would also be simple. We already send checks to
social security recipients. The Great Swap could
adopt a similar approach. The other reason that some policy experts favor this solution is because
it presents a compromise for liberals and conservatives. Liberals get a fairly robust,
meaningful tax on pollution that could dramatically
influence consumer behavior. Conservatives get fiscal reform
that shifts the tax burden from laborers to polluters. Now the tax reform
aspect of the Great Swap isn’t the only instrument meant
to appeal to conservatives. As part of the proposal, Professor Aldy suggests rolling back some
environmental regulations that would become redundant
once the carbon tax was in place. He reasons that once
consumers must face a tax on energy-intensive products,
they’ll automatically seek out alternatives
that don’t have the same carbon footprint. And there is a small but
growing group of conservatives who have endorsed similar
policies for combating climate change. One such conservative is
former congressman Bob Inglis. Congressman Inglis served
six terms in the House of Representatives for
South Carolina’s fourth congressional district. He’s a formal Institute
of Politics Fellow, and he likes oatmeal. – I think what mostly people
on the right have heard is some well-meaning
people on the left saying here’s what we’re gonna
do, we’re gonna grow the government and we’re
gonna solve this problem. And conservatives say no
you’re not, you’re not gonna grow the government,
and I don’t think you’re gonna solve the problem that way. – Inglis is now Executive
Director of RepublicEn.org, a coalition of conservatives
and libertarians that favor market approaches
to fighting climate change rather than regulations and subsidies. – We have to come along and convince them that there’s a very different solution that involves actually
a smaller government. We can actually reduce the size of the EPA by eliminating some
Clean Air Act regulations that would become redundant
if we were to price carbon dioxide. If we tell conservatives that
and get that message through then they could say now
you’re singing our tune. That’s our language,
we can sing that back. – [Narrator] Of course, a
policy like the Great Swap isn’t exactly a slam dunk for liberals, and there’s a few reasons for that. One is that progressives would
have a lot of justifiable concerns about how the
revenue would be distributed to taxpayers. In order to get liberals
onboard with the Great Swap, the distribution of carbon tax revenue would need to be progressive. Lower income families
would need to receive bigger checks. This would be particularly
important given that these families spend a
larger share of their income on energy expenditures compared
to high-income earners. It’s also possible that environmentalists wouldn’t get onboard with
the rollback of regulations. This is partly because while
a carbon tax would make it more expensive to burn fossil
fuels, it doesn’t outright limit their use and it’s
difficult to anticipate just how big an impact
such a tax would have. Professor Aldy estimates
that his tax proposal of $25 per ton of CO2
would lower emissions 26% by 2025, but this is just an estimate. Professor Aldy could be wrong. To get some input on
this regulatory issue, I reached out to Gina McCarthy. She’s the former Administrator
of the Environmental Protection Agency. She’s a big Red Sox fan,
and she’s a 2017 fellow at the Harvard Institute of Politics. McCarthy ran the EPA during the rollout of the Clean Power Plant, a new set of rules meant to reduce carbon
pollution from utilities. – EPA’s mission isn’t to
utilize a specific tool, it’s to get reductions. If the American people find a better way or a comparable way that
they like it better, I would be all for it. – [Narrator] But there’s a caveat. – The challenge you’re gonna have is that the science of climate is changing. I would wanna make sure
that anything put in place was revisited periodically to make sure that it keeps up with the
science and what it tells us. – [Narrator] To be clear, the Great Swap includes a mechanism by which policymakers could reassess the program’s impact every five years. Another objection that
voters on both the left and the right might have to
a carbon tax is the effect it would have on American competitiveness. A domestic carbon tax would
make American products and services more
expensive than those coming from other countries. To correct for this,
Professor Aldy proposes implementing a border tax on imports from countries that don’t
have their own carbon pricing regime. That way, our manufacturers can compete on a level playing field
with international firms, and the U.S. can use its
carbon tax as a stick to encourage other countries to join us in fighting climate change. That’s going to be a tough fight. Whether climate change
turns out to be pretty bad or really, really bad, it’s a big problem. And it’s going to take
big solutions to fix it. The Great Wwap may or may
not be the right approach, but given the consequences of inaction, let’s hope that policymakers come up with some carrots and
sticks very, very soon.

Bernard Jenkins

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