Op-Ed: Forget the Carbon Tax for Now

Source: By Justin Gillis, New York Times • Posted: Thursday, January 3, 2019

A worker in Paris preparing to clean the Arc de Triomphe after a protest against a proposed fuel tax. Protesters spray-painted a demand that President Emmanuel Macron resign.Thibault Camus/Associated Press

PARIS — The angry graffiti have been blasted off the Arc de Triomphe with water jets, leaving unnaturally white patches scarring the base of France’s national monument. The husks of incinerated cars have been cleared from the streets, the glass from shattered store windows swept up. The government has taken steps to appease the demonstrators, which may be working.

With a bit of calm upon us, now would be a good time for those of us concerned about climate change to engage in some introspection.

The violent demonstrations that flared this fall in France were a culmination of decades of rising anger among the working class, it is true, but they were triggered by plans to impose a tax hike on gasoline and diesel fuel at the pump in the name of fighting climate change. Only three years ago, French monuments were bathed in green floodlights to celebrate a global deal negotiated in a Paris suburb to limit emissions; now we are scraping ugly slogans off those monuments.

Days before the French fury boiled over in November, voters in one of most liberal American states, Washington, once again rejected a plan to tax emissions of carbon dioxide in the name of fighting climate change.

These tax proposals all spring from basic economic theory. If people and companies are abusing a public good — in this case, by dumping greenhouse gases into the atmosphere — the answer, economists tell us, is to put a price on that activity that reflects the harm and encourages the development of more benign alternatives. Because most of the gases that cause climate change contain carbon in some form, the shorthand term for this policy is a “carbon price.”

Yet the climate movement has, I fear, turned this potentially useful tool into a fetish. Discuss any aspect of the emissions problem these days and you will quickly hear somebody say, “A price is the answer,” or equivalent words. You hear that from the lips of politicians, from newspaper editorial boards, from utility executives and even from the heads of oil companies.

Yet the put-a-price-on-it mantra is proving, in practice, to be a political failure. The Democrats could not get such a policy through Congress even when they had big majorities in the first two years of the Obama administration. Efforts to sell Republicans on the idea that this is the most market-friendly approach to the emissions problem have failed miserably, and will continue to fail.

Proponents of carbon pricing like to point out that variants of the idea have spread all over the world, including to all the countries of the European Union and several American states and Canadian provinces. This is true, but when you look at how these systems have worked in practice, the picture grows murky. Invariably, huge political capital was spent to push through a carbon price too low to spur the rapid reductions in emissions that we need.

Cases that are held up as demonstrating the purported success of carbon pricing, like a tax in British Columbia, mostly prove that if you slap on a modest carbon price, you will get a modest economic response. That people may get used to paying the low tax does not seem to make it much easier, in these jurisdictions, to raise the price to a level where it will really bite.

The basic political problem is that the climate movement still does not have the strength of numbers to overcome entrenched opposition and put in the kind of stiff-and-rising taxes we would need to do the job. The oil companies may claim they want carbon pricing, but a subset of them spent more than $30 million in Washington State to kill the tax proposal there, twice as much money as the proponents were able to raise in support of their intelligent, carefully designed plan.

Damn the oil companies if you will, but they persuaded 56 percent of the voters to take their side, carrying every county in the state but three. What that vote, and the French protests, tell us is that any proposal to raise energy prices is going to run into a buzz saw of opposition, including from working-class people who already feel like they are being mistreated.

The political difficulties are not the only issue with carbon pricing, though. Even in theory, the idea is expected to work in some economic sectors but not in others, yet the fetishists hold it up as the magic answer to all problems.

For example, it is not at all clear that raising prices at the pump is the best way to reduce emissions from driving. European drivers already pay $6 to $7 a gallon for fuel, most of that in taxes, yet governments there have found that they still need efficiency regulations for cars. Moreover, if you want people to leave their cars at home, you have to give them alternative ways to get to work, and a hike in fuel taxes by itself does nothing to accomplish that. Much of the American public does not have access to public transit of any kind, and even in transit-dependent cities like New York and Washington, the subways have been allowed to fall apart.

The single most important climate policy in the world might be the efficiency regulations that the American government imposes on cars and trucks, which are under attack by the Trump administration. Climate advocates are fighting to defend them in court, but we also need concerned citizens to crawl all over Congress, pushing legislators to stop the rollback. What are many of us doing instead? Trying to persuade Congress to pass a carbon tax, when the political conditions to achieve that simply do not exist.

Here is more evidence that a carbon price is no magic bullet: One of the biggest climate problems is poorly constructed buildings that waste energy. A carbon price will not solve that problem, for the elementary reason that the people who put up the buildings, and have an economic motive to skimp on insulation and windows, are not the people who wind up paying the energy bills. The solution is building codes with strict energy requirements, vigorously enforced. Yet across huge swaths of the United States we still have weak building codes and lousy enforcement.

Building codes, you’re thinking? Yes, I know they seem boring. I am writing a book with an energy expert, Hal Harvey, who has convinced me that they could hardly be more important. A bad building wastes energy for decades. Yet are climate activists swarming Topeka City Hall, the Colorado statehouse or your local county commission to demand tougher building codes? I wish.

To be clear, I am not arguing that a carbon price is unimportant. I would repeal none of the ones that have already passed, and I am in favor of passing new carbon prices everywhere that the politics seem aligned to make it possible. The activists in Washington State who pushed that proposal made a noble effort, and in a better world they would have won — not least because their plan was designed with the interests of the working class in mind.

What I am saying is that we cannot argue for climate policy in a vacuum, ignoring the dangerous political moment we are in, when the anger of working people is being misappropriated by demagogues like Donald Trump and Marine Le Pen in France. We would be wise not to ratchet up that anger, as President Emmanuel Macron of France belatedly acknowledged when he yanked the proposed hike in fuel taxes.

Any carbon tax that is put on the table needs to be designed with that in mind. Maybe the opening promise should be that every penny of the money will go to relieve the burden on the working class, perhaps by cutting payroll taxes and putting more cash into its pockets the day the carbon tax goes into effect. Some countries might be able to push that through, even if the United States cannot.

In the final analysis, the economic theory is right, of course: We do need a price on carbon. Some of our most important goals, such as cutting emissions from heavy industries like steel mills and cement plants, are likely to be impossible to achieve without it.

But just because a stiff carbon price is, in theory, the biggest tool in the toolbox, I am not sure that means we have to whip it out first. Many other tools are available. A policy known as a clean-electricity standard, which would require that a certain share of electricity generation come from low-carbon sources, could get us a long way in the United States. Republicans have shown some interest in it in the past. Stricter building regulations are also needed the world over.

Maybe we need to use those techniques to convince people that emissions really can be cut without wrecking the economy or further impoverishing the working class. Then, having proved that, we would pull the big tool out last.

Justin Gillis, a former Times editor and environmental reporter, has been a contributor to the Opinion section since January 2018. He is working on a book about energy policy. @JustinHGillisFacebook