Carbon pricing could do a small number of things very well: It could deal a final death blow to coal (the most potent carbon dioxide emitter), which would become prohibitively expensive where it’s not already. It could tip big institutional consumers toward more energy-efficient decisions regarding things like construction materials and vehicle fleets. At the everyday consumer level, it could encourage spending extra income on, say, a low-carbon trip to a local theater rather than a high-carbon tchotchke shipped from Amazon. The revenue gained from carbon pricing, rather than all going toward a dividend, could provide a much needed burst of investment in green jobs and resiliency programs that serve communities on the front lines of the crisis—as campaigners behind a failed progressive carbon tax in Washington state proposed in 2018.
A carbon tax won’t do what’s ultimately needed: Keep the carbon in the ground. In fact, a minimal carbon tax like what’s currently proposed could be just enough to leave oil and gas companies alive while killing off coal, fueling a dangerous infrastructure build-out and extraction boom.Whatever variant of carbon pricing you may prefer, a national fight over that policy will be a fight on industry terms. Corporations claim to support the idea and have already claimed a seat at the table, ensuring the debate would be about what price the industry pays and passes down to consumers instead of what policy might actually reduce and end fossil fuels. One carbon tax that perhaps is gaining steam, for example, is a real devil’s bargain, coming to us from the ExxonMobil and BP-sponsored Climate Leadership Council: In this version, industry would accept a modest price on emissions in exchange for protection from climate liability lawsuits and regulations.
Piles of coal sit in front of Pacificorp’s 1440 megawatt coal fired power plant in Castle Dale, Utah. (Photo by George Frey / Getty Images) Aug 19, 2019.
A carbon tax isn’t a bad idea, but by itself could be politically dangerous. By KATE ARONOFF
Carbon pricing could do a small number of things very well: It could deal a final death blow to coal (the most potent carbon dioxide emitter), which would become prohibitively expensive where it’s not already. It could tip big institutional consumers toward more energy-efficient decisions regarding things like construction materials and vehicle fleets. At the everyday consumer level, it could encourage spending extra income on, say, a low-carbon trip to a local theater rather than a high-carbon tchotchke shipped from Amazon. The revenue gained from carbon pricing, rather than all going toward a dividend, could provide a much needed burst of investment in green jobs and resiliency programs that serve communities on the front lines of the crisis—as campaigners behind a failed progressive carbon tax in Washington state proposed in 2018.
So I don’t think, as Cynthia argues, that a carbon tax should be taken off the table, but she’s right about its limits. A carbon tax won’t do what’s ultimately needed: Keep the carbon in the ground. In fact, a minimal carbon tax like what’s currently proposed could be just enough to leave oil and gas companies alive while killing off coal, fueling a dangerous infrastructure build-out and extraction boom.
In addition, we should be wary of the political impacts of treating carbon pricing as the tip of the spear of climate action. The past decade of climate policymaking offers scant hope that a carbon tax could get us to necessary, more ambitious changes. A decade ago, federal legislation to implement another type of market-based carbon pricing legislation—the Waxman-Markey cap-and-trade bill—collapsed after industry withdrew its support midway through the legislative process. The implosion has since kept ambitious climate action off the federal legislative docket. Attempts at carbon pricing from state legislatures have also been reliably stymied, in large part thanks to industry meddling.
Whatever variant of carbon pricing you may prefer, a national fight over that policy will be a fight on industry terms. Corporations claim to support the idea and have already claimed a seat at the table, ensuring the debate would be about what price the industry pays and passes down to consumers instead of what policy might actually reduce and end fossil fuels. One carbon tax that perhaps is gaining steam, for example, is a real devil’s bargain, coming to us from the ExxonMobil and BP-sponsored Climate Leadership Council: In this version, industry would accept a modest price on emissions in exchange for protection from climate liability lawsuits and regulations.
Even if a carbon tax passes, poor implementation could poison the policy debate and eat up time we don’t have. As France’s Yellow Vests movement revealed, crassly pushing through a gas tax is a recipe for disaster in the context of austerity and inequality. Owen suggests a dividend would help win popular support, but a dividend won’t be enough to shore up those who stand to lose most from a sloppy energy transition. Even a few thousand dollars a year won’t replace the livelihoods and pensions of coal workers, and carbon-intensive expenditures aren’t a matter of choice for many people. In rural or underserved areas, for example, there are no alternatives to driving. A carbon price alone—dividend or no—can’t provide the massive public infrastructure investments needed to make low-carbon lives possible for all. The success of any carbon pricing measure depends on a suite of complementary policies; carbon pricing alone would hardly pave the way.
As Cynthia rightly points out, there are far better places to start, such as ending the tens of billions of dollars that industry rakes in each year from state subsidies. Passing commonsense regulations to end drilling near homes, playgrounds and hospitals would be a great start, too.
All that said, it would be premature to swear off carbon pricing—given the scale of the climate crisis, we need all the tactics we can get. Carbon pricing isn’t a bad one, just a foolish (and maybe even dangerous) place to begin.
For alternate perspectives on this issue, see “The Government Should Write Everyone a Check—Paid for by a Carbon Tax” by Owen Poindexter and “Don’t Tax Carbon—Just Stop Digging It Up” by Cynthia Mellon.
Don’t Tax Carbon—Just Stop Digging It Up
Carbon taxes are regressive and ineffective, failing to provide the transformative change we need.BY CYNTHIA MELLONShareTweetReddit0EmailPrint
The belief that a tax-driven process is possible distracts from the more complex and deep-reaching political changes necessary to drastically cut carbon emissions.
For alternate perspectives on this issue, see “The Government Should Write Everyone a Check—Paid for by a Carbon Tax” by Owen Poindexter and ”Some Economists Say Carbon Taxes Are a Silver Bullet. The Reality Is More Complicated.” by Kate Aronoff.
Owen argues that a carbon tax and dividend could cut carbon emissions while contributing to the general welfare, but the model is deeply flawed. Indeed, any carbon tax—whether the revenue is redistributed as dividend or not—would be both ineffective and regressive. We should shift our energies toward climate solutions that eliminate fossil fuels altogether.
For starters, actually existing carbon taxes from Canada to the Netherlands have, at best, reduced carbon emissions only modestly. Look at British Columbia: In 2008, the Canadian province implemented a carbon tax with revenues returned through dividends and income tax rate reductions. While the province’s emissions declined in the program’s first year, they rose again in subsequent years.
The environmental group Food and Water Watch (FWW) indicates that the type of emissions subject to the tax actually increased in British Columbia between 2011 and 2014, while untaxed emissions went down. As a result, FWW concluded, “It appears that the British Columbia carbon tax has had no beneficial long-term impact on greenhouse gas emissions.” The report speculates that a lack of adequate public transit (meaning individuals rely on cars regardless of the increased price of gas) and the promise of a dividend and lower taxes (which meant people and businesses didn’t mind paying slightly higher energy prices) contributed to the policy’s failure.
But the problems run deeper. Market-based approaches such as a carbon tax are accepted by the fossil fuel industry because they do not actually threaten the ongoing and continuous extraction of oil and gas. In a statement on the 2015 United Nations climate talks in Paris, ExxonMobil endorsed a carbon tax as “the best option” to address climate change while “let[ting] the market drive the selection of solutions.” But the market by itself cannot set in motion a process of reducing carbon emissions toward zero, nor address the larger structural inequalities that are becoming ever more apparent.
According to Basav Sen, climate justice project director at the Washington, D.C.-based Institute for Policy Studies, “A price on carbon is like a sales tax—it doesn’t make polluters pay for greenhouse gas pollution. It makes end users pay.” By contrast, he says, “A regulator solution that phases out fossil fuel extraction and use can be designed to penalize those who are responsible for the problem, not everyone else.” This direction is where we need to go.
Owen argues that the financial burden of a carbon tax could be outweighed by a dividend, while others propose that carbon tax revenues should be used to implement climate solutions in frontline communities. But, as Sen points out (and Owen concedes), if a carbon tax were actually effective, revenues would decline as emissions decrease. The tax itself is not a reliable source of funds for either idea.
There is no evidence that the fossil fuel industry, with its powerful lobby in Washington, would permit a carbon tax to be set high enough to actually compensate for the vast harm the industry has done (and continues to do) across the globe, especially in communities near the sites of extraction.
The belief that a tax-driven process is possible distracts from the more complex and deep-reaching political changes necessary to drastically cut carbon emissions, such as regulating against the extraction and use of fossil fuels and seeking the best and most inclusive ways of transitioning toward a regenerative economy—one that doesn’t leave vulnerable people and communities behind. For instance, governments worldwide provide an estimated $775 billion to $1 trillion annually in subsidies to fossil fuel corporations (not including the social costs that get shifted onto the poor by climate and health impacts and such externalities as military interventions). It can be argued that the fossil fuel industry would not be viable if it were forced to adhere to a strict business model without subsidies and tax breaks.
Ending subsidies would be a start. But a carbon tax is not the answer.
For alternate perspectives on this issue, see “The Government Should Write Everyone a Check—Paid for by a Carbon Tax” by Owen Poindexter and ”Some Economists Say Carbon Taxes Are a Silver Bullet. The Reality Is More Complicated.” by Kate Aronoff.
CYNTHIA MELLON Cynthia Mellon is policy coordinator at the Climate Justice Alliance (CJA), a growing member alliance in the climate justice movement of 70 urban and rural frontline communities, organizations and supporting networks in the climate justice movement. CJA is dedicated to building Just Transition away from extractive systems of production, consumption and political oppression, and toward resilient, regenerative and equitable economies.
