Scientists project the Earth will warm somewhere between 2.5 and 5 degrees celsius due to greenhouse effects of carbon dioxide (CO2) emissions in the next 100 years, implicating catastrophic change in climate across the globe. A proposal published by People’s Policy Project seeks to save the world from climate disaster in a simple yet clever manner: through imposition of a carbon tax.
Written by Anders Fremstad and Mark Paul, professors at Colorado State University and New College of Florida, respectively, “Disrupting the Dirty Economy: A Progressive Case for a Carbon Dividend” is an ambitious plan for how the United States can begin the transition toward a Green economy.
The basic idea of the plan is to create cause for change in industrial, financial, and consumer behavior, so there is greater reason to make the jump from dirty energy sources to clean. The cause for change would be a substantial tax placed on commodities such as coal, natural gas, and oil, which would increase the price of goods generated by coal, natural gas, and oil.
For a demonstration, researchers took the example of gasoline to show the impact of a carbon tax; they estimated “the price of gas will increase about $0.01 per gallon for every $1 per ton of CO2.” The authors propose a $230 tax per ton of CO2, so the tax would increase the price of gasoline by $2.30 per gallon, thus raising gas prices by 79%.
The authors do not shy away from the implications of such a sudden break from past consumption habits: “A sizable carbon tax is going to disrupt the economy. That is a feature not a bug.” And the people most likely harmed by disruption will be those most vulnerable, the economically disenfranchised. Whereas other carbon tax proposals would have the money raised through the new tax invested into research and development of clean energy sources, as well as new infrastructure projects to actually build a greener economy, Fremstad and Paul recommend the creation of a wealth fund similar to the Alaska Permanent Fund, which would redistribute money equally to all Americans.
They estimate that “a carbon tax of $230 per ton will increase the cost of goods and services by approximately $750 billion.” Undoubtedly, this would harm those without money more than it would harm those that have money, which is not fair to poor Americans; “a single rich person pollutes about as much as 5.5 poor people.” Thus, to mitigate economic distress caused by the new carbon tax amongst low-income citizens, Fremstad and Paul suggest a universal dividend. The authors estimate “that each person in the US will receive an annual carbon dividend of $2,237.” Though poor people would pay more for consumption goods, it would still be a net positive result: “a tax of $230 per ton of CO2 would cost the average person in the poorest decile $866 or about 14% of income, while it would cost the average person in the richest decile $4,738 or about 9% of income.”
A byproduct of the carbon-tax-and-dividend proposal is that it “would create new enforceable property rights that empower us to protect the environment.” Since we hold the environment in common, Americans receive an equal sum of money, which will prompt citizens to reevaluate their perception of industrial behavior. Fremstad and Paul cite Garrett Hardin’s “The Tragedy of the Commons” to illustrate their point: “we can think of the carbon sink capacity of our atmosphere as an open access resource. Firms, governments, and individuals dump too much CO2 into the atmosphere, just as herders add too many cattle to the pasture...if we do not regulate access...our carbon sink will be rapidly filled, making everyone worse off.”
In order to prevent a future where the cattle have eaten all the pasture and left nothing for the future — to stop the world from warming beyond 2.5 degrees celsius and submerging 80% of human civilization under ocean waters — Americans must change industrial, consumption, and financial behavior and reduce carbon emissions. And this carbon tax proposal is a good first step in the direction of a cleaner, sustainable, future.
Dallas Knapp is a writer in Bloomington, Ill.
From The Progressive Populist, November 1, 2018
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