Ihave to admit, State of the Union speeches aren't overly interesting to me. They always seem to be about an hour of clapping and about 10 minutes of speech. To me, this past State of the Union address however, felt different. I was excited to say the least. After another year of climate extremes -- 2012 the warmest year on record in the U.S. by a full degree, SuperStorm Sandy destroying the New Jersey and New York coastlines, a mega-drought in the Midwest affecting our food supplies and costing our economy $75 billion to $150 billion in damages -- action on climate change now seems imminent.
Some insiders say Sandy was the cause of this newly lit fire under the president to act on climate change. Whatever the reason, action is what we desperately need. In his speech the president said, "If Congress won't act soon to protect future generations, I will."
One tool the president has to act on climate change is EPA regulations. Luckily, Republicans who wish to avoid more regulations can embrace a free-market approach to addressing climate change: a steadily-rising, revenue-neutral carbon tax.
The concept behind a carbon tax is simple. The polluter pays.
There are many hidden costs to society that the fossil fuels industry should be paying for: taxpayer funded military protections for overseas oil supplies, healthcare costs from air and water pollution, costs of damages from and adaptation to climate change, to name a few. A carbon tax would begin to address these hidden costs and level the playing field between clean energy and fossil fuels. Making the tax steadily rising would send a price signal to the market to shift investment toward clean energy, lowering the costs to consumers.
A carbon tax could be placed on carbon-based fuels at the first point of sale -- the wellhead, mine or port of entry. The tax would be on the amount of CO2 emitted by each fuel when burned. Coal would be taxed most heavily -- as it is the dirtiest fuel source -- and natural gas the least. One hundred percent of the revenue collected could be returned equally to every household, making the tax revenue-neutral.
A border tax adjustment placed on imported goods coming from countries without similar carbon pricing would protect U.S. manufacturers from being undercut by these countries. This negates the Republican argument that we should not act because other countries are not acting. A border tax adjustment would encourage countries like China to implement a carbon tax of their own to keep their money in their own treasuries rather than paying it out to the U.S. in border taxes.
EPA regulations would do nothing to encourage other countries to reduce their own emissions, yet another reason to enact a carbon tax instead.
A carbon tax has the support of many conservative economists. Greg Mankiw, who was economic advisor to George W. Bush and Mitt Romney, had this to say about a carbon tax: "Economists have long understood that the key to smart environmental policy is aligning private incentives with true social costs and benefits. That means putting a price on carbon emissions, so households and firms will have good reason to reduce their use of fossil fuels and to develop alternative energy sources."
Art Laffer, President Reagan's economic advisor has said, "By eliminating subsidies for all fuel types and making all fuel types accountable for their costs, free enterprise will make clear the best fuels for our future. Reduce taxes on something we want more of -- income -- and tax something we arguably want less of -- carbon pollution. It's a win-win."
Returning all of the revenue back to every household would protect consumers from the economic impact of rising energy costs associated with the carbon tax. At the same time, these rising costs influence consumer choices, like making homes more energy efficient or purchasing vehicles that are more fuel efficient.
It no longer makes sense to dig stuff up and burn it for energy. A study from Mark Jacobson of Stanford University showed that the world can be powered by 100 percent clean, renewable energy in as little as 20 years, using technology available back in 2009, for roughly the same cost of fossil fuels. One of the benefits of the plan is that converting to clean energy would reduce global power demand by 30 percent because it involves converting combustion processes to electrical or hydrogen fuel cell processes. Electricity is much more efficient than combustion.
The president has laid it out for Congress; business as usual is no longer acceptable. Congress can have a guiding hand in the transition to a clean energy economy using a free-market approach that will strengthen our economy. One thing is clear, the planet is not waiting for action on climate change, and neither should our children.
-- Jon Clark is the group leader for the York chapter of Citizens Climate Lobby.