The United States has an advantage over China in producing goods and services at lower rates of carbon emissions, a GOP-backed group said in a new report Wednesday aimed at winning over Republicans skeptical of carbon taxes.
Right now, there are no policies in place to reward U.S. companies for producing less carbon than competitors. But the report, published by the Climate Leadership Council, finds that imposing a carbon price with a border adjustment, or import tax on carbon-intensive goods, would change that and force competitors to lower their emissions if they want a piece of the U.S. market.
“This study shows how America can act to create a competitive advantage for U.S. manufacturers and encourage other countries to do their part to reduce emissions,” said former GOP Secretary of State George Shultz, a co-author of the Climate Leadership Council carbon tax and dividend plan.
“It’s the type of policy we need to unite both the left and the right behind a meaningful U.S. climate strategy,” Shultz told the Washington Examiner.
The council’s report shows goods produced in the U.S. are 80% more carbon-efficient than the world average. The U.S. is three times more carbon-efficient than China and nearly four times that of India, meaning it can make the same or similar products, such as oil and gas, steel, rubber, and plastics, while emitting less carbon.
That means if subject to a U.S. carbon import tax, overseas businesses looking to export their goods here would pay a higher price compared to domestic manufacturers with a smaller pollution footprint facing a carbon price.
“There remains this false choice we have to select between climate ambition and U.S. competitiveness,” said Greg Bertelsen, CEO of the Climate Leadership Council. “What this data shows is by not addressing climate change, we are leaving a huge U.S. economic opportunity on the table.”
The report notes, though, European countries such as Germany, France, the United Kingdom, and Italy are slightly more carbon-efficient than the U.S.
The European Union has pledged as soon as next year to tax imports of carbon-intensive goods as part of its law targeting net-zero greenhouse gas emissions by 2050, potentially costing big exporters such as the U.S. and China.
Bertelsen said the U.S. should beat competitors to the punch.
“It’s clear the world is moving in this direction of increasing climate ambition,” he said. “So the U.S. is left with a fairly simple choice. Sit idle and let our trading partners establish rules we will have to operate in, or we can lead and set the new world order on climate and trade.”
A bevy of businesses, including oil and gas majors, automakers, and big banks, have endorsed the council’s carbon tax proposal, which would return revenue from the levy as a rebate to taxpayers instead of spending it on other government programs.
The council released a separate report Wednesday showing the lowest-earning 80% of American households, on average, come out financially ahead under the carbon tax and dividends plan, meaning they would receive more from the rebate than they’d pay in higher energy costs.
But no Republican lawmakers have endorsed the plan, wary of being perceived as raising taxes.
