Carbon tax and dividend under spotlight

Source: By Josh Siegel, Washington Examiner • Posted: Thursday, November 7, 2019

CARBON TAX AND DIVIDEND UNDER SPOTLIGHT: A prominent environmental group is coming to Capitol Hill next week to lobby for a carbon tax and dividend as a “middle ground” option to combat climate change just after the release of an independent study showing the potency — and shortcomings — of such a policy.

More than 800 Citizens Climate Lobby volunteers will meet with congressional offices Tuesday to urge support for the Energy Innovation and Carbon Dividend Act, the straightforward bipartisan carbon tax proposal that has 68 co-sponsors in the House, the most of the seven carbon tax bills that have been introduced in Congress. The bill distributes the revenue from the tax into monthly rebates, divided into equal portions, to U.S. households, protecting them from higher energy costs

“This is the lynchpin climate policy,” said Mark Reynolds, the group’s executive director. “This is the most important one.”

A study released Wednesday by Columbia’s Center on Global Energy Policy, shows the bill would cause U.S. net greenhouse gas emissions to fall 32% to 33% from 2005 levels by 2025 and 36% to 38% below 2005 levels by 2030. That is about one-third of the way to reaching net-zero emissions by 2050, the goal of many Democratic presidential candidates based on a target set by the U.N.’s climate panel. The bill has an overall target of 90% emissions reductions by 2050, compared to 2016 levels.

The emissions data is either a reason to be optimistic, or cynical: Depending on your point of view, of course.

While that level of emissions reductions is ahead of the pace from the Obama administration’s commitment to the Paris climate agreement, it is not a one-stop savior policy.

That’s because most of the near-term emissions reductions occur in the power sector, where there are easy alternatives to coal, which would be mostly eliminated because of the tax by 2030. However, some sectors, such as buildings and transportation, are slower to respond to a carbon tax because there are relatively smaller changes in consumer prices, and less smooth alternatives (getting millions of people to switch from gas-powered cars to electric ones is hard). The bill also does not cover agriculture, responsible for about 9% of U.S. emissions.

“This would clearly be the biggest climate policy in the history of the world in terms of emissions reductions over the first decade,” said Noah Kaufman, a Columbia energy economist who co-authored the report. “It’s the cornerstone of a broader policy. It’s not sufficient in itself.”

There’s a mixed bag of takeaways on the political front: One the one hand, the Columbia study found that dividend revenues would be a wash for average consumers, who receive checks in the mail that roughly compensate them for energy price increases (the richest households would receive less than they pay, because they spend more on carbon-intensive goods).

On the other hand, the bill falls slightly short of being “revenue-neutral” as promised.

“You don’t want to be banging the table on something if the data doesn’t back it up,” Kaufman told Josh. “It’s a political liability if people want to see it as strength.”

There’s also the problem of political math: That is something Citizens Climate Lobby is aware of, but not worried about. The legislation’s one Republican co-sponsor — Francis Rooney of Florida — is retiring. The group is hoping for a bipartisan bill to be introduced in the Senate, but it can’t find a Republican to do it.

Reynolds hopes that will change, but he’s not anticipating new Republican endorsements to come out during lobbying week, in the heat of election season.

“There is going to be a moment where it becomes clear the politics have changed and something will happen quickly,” Reynolds said. “We are trying to build trust and credibility so we can seize that moment.”