Carbon Dividends: Solve Man-Made Climate Change While Shrinking Government?
Carbon tax and dividend plan would eliminate all EPA carbon regulations, all clean energy subsidies, and all energy efficiency standards.
The Climate Leadership Council, a group of conservative stalwarts, has just released its carbon dividends proposal as a way to address the man-made climate change problem. They accept that man-made global warming could become a significant problem for humanity later in this century. In order to mitigate that risk, they propose a carbon dividends plan that rests upon four pillars: (1) a gradually increasing carbon tax, (2) carbon dividends for all Americans, (3) border carbon tax adjustments, and (4) the elimination of all current top-down climate change regulations.
The CLC folks envision the carbon dividend plan as collecting a carbon tax beginning at about $40 per ton at the wellhead, minehead, or import terminal. The tax would gradually and predictably increase over time enabling innovators, businesses and consumers to take future energy prices into account as they make their plans. The CLC group calculates that the tax would initially garner $200 and $300 billion which they estimate would yield about $2,000 annually in dividends for a family of four. All of the tax proceeds would be distributed on an equal and quarterly basis via dividend checks, direct deposits or contributions to their individual retirement accounts. The CLC cites a Treasury Department estimate that the bottom 70 percent of Americans would come out ahead under their proposal. "Carbon dividends would increase the disposable income of the majority of Americans while disproportionately helping those struggling to make ends meet," they calculate.
Border adjustments to prevent free-riding would be made to goods imported from countries without comparable carbon taxes and rebates made to American exporters whose goods are subject to comparable foreign carbon taxes. Border adjustment proceeds would be added to the quarterly carbon dividends paid to Americans. The carbon tax and dividend program would entirely replace the EPA's current tangle of intrusive, burdensome, and expensive regulations on carbon emissions.
Specifically what regulations would be eliminated? The CLC group argues for getting rid of the Obama Administration's Clean Power Plan that would have required electric power generation companies to cut their carbon dioxide emissions an average 30 percent by 2030. Adopting the carbon dividend proposal would also justify eliminating all green energy subsidies and tax preferences and all energy efficiency standards. In addition, the Corporate Average Fuel Economy Standards (CAFE) and state renewable energy portfolio standards could be dumped. As result, the CLC folks argue that their carbon dividend proposal will shrink the overall size of government and steamline the regulatory state.
Recognizing the vexed politics concerning climate change, the CLC folks note that all four pillars of their proposal must be adopted. They state:
For the elimination of heavy-handed climate regulations to withstand the test of time and not prove highly divisive, they must be replaced by a market-based alternative. Our policy is uniquely suited to building bipartisan and public support for a significant regulatory rollback. It is essential that the one-to-one relationship between carbon tax revenue and dividends be maintained as the plan's longevity, popularity and transparency all hinge on this. Allocating carbon tax proceeds to other purposes would undermine popular support for a gradually rising carbon tax and the broader rationale for far-reaching regulatory reductions.
According to The New York Times, CLC member James Baker who served as Reagan's Treasury Secretary is scheduled to discuss the plan today with Vice President Mike Pence, Jared Kushner, the senior adviser to the president, and Gary D. Cohn, director of the National Economic Council, as well as Ivanka Trump.
