The carbon dividends plan: A breakthrough on CO2?

By Barbara Lucas & David Fair

This story originally appeared on The Green Room from WEMU and is republished here with permission.

Carbon taxes are a seemingly simple way to deal with the climate crisis. As the price of fossil fuels goes up, consumption goes down. But fears of negative economic impacts have kept the idea from moving forward in the U.S. Now, a group of leading Republican elders has a proposal that goes a step further. They call it “carbon dividends,” because the taxes collected are returned to the public. What is the local reaction?  In this installment of WEMU’s “Green Room” series, Barbara Lucas sets out to find out.

David Fair (DF): This is 89.1 WEMU and I’m David Fair. Welcome to “The Green Room.” The Trump administration is rolling back the Clean Power Plan. Those rules were enacted in the last administration in an effort to limit CO2 emissions from power plants.  Some say a rollback without replacement sounds a death knell for the Paris Agreement. That’s the multinational effort to avert climate disaster.  But, on February 8, a surprising announcement was made by a group of Conservative elders that some consider a breakthrough. It’s a climate change solution that just might have political legs. The crucial question is: Will people lend their support? Barbara Lucas sets out to find out, in this month’s edition of the “Green Room.”

Group call:  All right, great job Grand Rapids! Detroit, Michigan with eight people. Nice Detroit! Philadelphia, six people. Madison with forty today!

Barbara Lucas (BL):  Those are some of the nearly 400 North American chapters of the Citizens’ Climate Lobby, checking in to their monthly group call.

Group call:  The proposal is on an upstream fee on the carbon content of fossil fuels, starting at $40 per ton, increasing at 2% above inflation per year.

BL:  About 35 people in the Ann Arbor CCL chapter are gathered in a circle.  They’re listening intently to news of the climate solution announced February 8th by the newly formed Climate Leadership Council.  It’s a tax on carbon that’s collected at the source–the coal mine, the oil well, or the port of entry.  And the fee is distributed back to citizens in the form of a dividend, making it revenue neutral.

Group call:  The authors estimate emission reduction nearly two times what all Obama era regulations would achieve…

BL:  Actually, this proposal is very similar to what the CCL’s 20,000 plus volunteers have already been lobbying for, for ten years now.

Group call:  …So this is not our policy, and we like our policy better, but it’s still something to be very excited about.

BL:  The reception it’s received is impressive. Already over 26 major editorial endorsements:  The Washington Post, The New York Times, The Financial Times, The Nature Conservancy, National Audubon, the list goes on.  Why is the new proposal generating so much excitement?

James Baker:  If we can get an insurance policy that is a conservative approach….

BL:  That’s no less than James Baker, former Secretary of State and Treasury Secretary under both Reagan and Bush.

Baker:  …based on the free market, that limits government rather than expands it, and that is competitive internationally that’s a win-win and we had to take a look at that.

BL:  What?  A revered Republican, advocating a carbon tax?  Actually, he’s joined by a who’s who of conservatives:  George Schultz–another former Secretary of State and Treasury Secretary–under Nixon and Reagan.  Leading economists.  The CEO of Walmart.

Baker:   I was and remain a skeptic about the extent to which man is responsible for climate change.

BL:  But still, Baker says the risks are too great to ignore. He points out that President Reagan instituted a similar free market strategy to fight the looming threat of depletion of the ozone layer.

Baker:  As it turned out the scientists who were worried at that time about that depletion, turned out to be right, and Reagan’s Montreal Protocol came along just in time. So we argue that we should substitute a carbon tax for the raft of regulations and subsidies that now characterize this issue.  For the sake of our children and grandchildren…

BL:  Here’s economist Marty Feldstein.

Feldstein:  A carbon tax is just simply the simplest and most economically effective way to reduce the level of carbon emissions that contribute to global warming.  It’s better than the more cumbersome method of regulation that we now use.  It’s also simpler, and much more reliable, than the so-called cap and trade method.

BL:  While the Citizens’ Climate Lobby strives to be nonpartisan, thus far it’s managed to attract mostly Progressives.  The Climate Leadership Council, in contrast, prominently bills itself as Conservative.   And considering current politics, that’s key.  But will that in itself be effective in enticing Republicans to embrace the plan?

BL:  Looking for folks who may be right of center, my first stop is the Dexter Forum.  The bimonthly discussion was founded and is co-led by a Democrat and a Republican.

BL:  Last week, I don’t know if anyone heard about it, there was a proposal to…

BL:  No one here has heard of it yet, but initial reactions are skeptical.

Forum Attendees:  I’m just sort of befuddled by it, that this is a conservative proposal, and the government collects money and distributes it to other people.  It’s not consistent with… and calls it market-based!  Sounds like a tax to me!

BL:  James Baker and his crew are well aware of this major challenge.  So they call it…

Baker:  Carbon Dividends.  There’s a carbon tax buried in there somewhere, but this is a program for Carbon Dividends. Make sure you understand that.

BL:  They estimate the dividend would start out at about $2,000 per household per year, and go up from there.

Baker:  This is not a tax in that sense. It does not grow government.  It is rebated dollar for dollar to the American people.

BL:  But still, Ed Francis, a left-leaning member of the Dexter Forum, is concerned about impacts to the poor.  He says some of them have far to travel, for work or groceries.

Ed Francis: My concern is that, would that carbon tax somehow penalize those people?  It’s like, “Yeah, they get something back.”  But would it be enough to balance out their need?

BL:  Similar concerns were voiced by the left in the bitter battle over the carbon tax proposal which was defeated in Washington State, last November. But Climate Leadership Council founder Ted Halstead, says these fears are unfounded.

Ted Halstead:  According to the Department of Treasury, 70% of Americans would come out ahead with this plan. In fact the bottom 70% of Americans would come out ahead under this plan. What that means it is 223 million Americans stand to benefit financially from solving climate change.

BL:  But ultimately, will Progressives support a proposal offered by Conservatives?

BL:  I’m in the “diag” at the University of Michigan in Ann Arbor at a climate rally.  It’s February 18th and 66 degrees.  From the signs they’re carrying and their chants, I’m guessing this is a fairly left-of-center crowd.

Rep. Debbie Dingell:  We can’t just gather in the diag.

BL:  One of the six speakers is U.S. Congresswoman Debbie Dingell.

Dingell:  We have to make sure that we have action plans, and that we are delivering on those action plans.

BL:  The Citizens’ Climate Lobby has co-sponsored the rally.  Here’s Ann Arbor CCL Chapter Chair Ginny Rogers, commenting on the news of the Conservatives’ action plan.

Ginny Rogers:  Their plan is quite similar to ours. The differences in the Climate Leadership Council’s Carbon Dividends plan is that theirs also calls for eliminating some regulations, I think specifically the Clean Power Plan.

BL:  But any rollback of the Clean Power Plan makes it a non-starter with some groups, such as the Natural Resources Defense Council, which issued a statement in opposition.  Are there left-leaning leaders who will consider fewer regulations? Chip Smith, Ann Arbor City Council and Environmental Commission member, is a speaker at the rally.

Chip Smith:  But if it is, you know, “We think there’s a better way of accomplishing the same thing as the Clean Power Act,” well, then we would be doing a disservice to the country if we were to not have that discussion.

BL:  State Representative Yousef Rabhi is also a speaker at the rally.

Rabhi:  No plan is perfect, of course, and something is better than nothing.  And if this plan has a chance of moving forward, then wonderful.

BL:  Both seem willing to lend cautious support.

Smith: Getting to the discussion of the national carbon tax is really, really important. And I think the only way we get there is if it comes from Republicans, quite frankly.

BL:  While there’s opposition to this plan, there’s also support.  Those concerned about climate are relieved that a conversation, at least, may finally be starting that includes a broad spectrum of perspectives.  In the “Green Room,” I’m Barbara Lucas, WEMU News.

Resources:  

Citizens’ Climate Lobby 

Climate Leadership Council