Liberals are moving away from carbon taxes as the primary answer to combating climate change, leaving the policy with little support on either side of the political spectrum.
“Carbon pricing is not doing well politically,” Kevin Book, managing director for research at ClearView Energy, told the Washington Examiner. “The challenges from within the Republican Party are already insurmountable today, and the abandoning of pricing and market-based mechanisms on the Left are dooming its revival in the long term.”
Progressives envisioning a “Green New Deal” are turning away from carbon pricing in favor of government mandates to transition the U.S. to entirely renewable energy.
“Carbon pricing is a tiny part of the Green New Deal,” Saikat Chakrabarti, the chief of staff for liberal sensation Rep. Alexandria Ocasio-Cortez, D-N.Y., told the Washington Examiner. “The climate debate should be about how many windmills, solar farms, and electric vehicles we can build.”
While a few Republicans in the House and Senate have joined with Democrats to introduce carbon tax bills in recent weeks, freshman progressives with the support of activist groups are pressuring Democratic leadership to pursue bolder, broader policies, ones that wouldn’t have bipartisan support.
Their preferred approach would marry massive public investments in clean energy infrastructure such as light rail, electric vehicle charging stations, and weatherized buildings, with progressive policies such as a jobs guarantee and nationalized healthcare.
“A carbon price is one tool,” Greg Carlock, “Green New Deal” research director at the progressive think tank Data for Progress, told the Washington Examiner. “But it is insufficient as the only piece. There has to be other spending, regulations, and maybe other taxes. My gravest concern is that we try for what is most likely to pass in a bipartisan sense, but punt the issue of decarbonization down the road.”
A large swath of left-leaning environmental groups warned leadership in the House of Representatives in a January open letter signed by over 600 organizations that “market-based mechanisms” addressing climate change risk placing “profits over community burdens and benefits.”
Democrats failed in 2009 to enact a cap and trade carbon pricing bill that passed the House but died in the Senate. House Speaker Nancy Pelosi, D-Calif., has said she wants to revive cap and trade, a policy that sets a limit on emissions while allowing companies to buy and sell allowances that let them emit a certain amount.
But Pelosi’s cap-and-trade ambitions could elicit skepticism from progressives who don’t believe companies will actually stop using fossil fuels just because they cost more and would prefer the government set emissions limits.
These critics also worry that the higher energy costs associated with a carbon tax would harm lower-income people.
Carbon pricing has struggled politically recently, encouraging the progressive opposition.
Voters in liberal Washington state rejected a ballot initiative in November that would have taxed carbon emissions and spent most of the proceeds on renewable energy projects. Oil and gas companies spent heavily to defeat the measure.
“You can’t avoid the evidence that working on taxes is fraught with many challenges,” Carlock said. “There is an American narrative that resonates that we don’t like to be taxed.”
Some Democrats in Congress defend carbon taxes on pragmatic grounds, arguing that a legislative response is necessary in light of recent reports by the United Nations and the federal government concluding that policymakers worldwide must set comprehensive policy to avoid the worst consequences of climate change, such as sea-level rise, stronger storms, flooding, and drought.
“We need solutions as big as the problems we’re facing, and a big tent of supporters to make them a reality,” Sen. Brian Schatz, D-Hawaii, said in a statement to the press. “Interest in a Green New Deal is growing because of the opportunity to invest in jobs as part of the solution, and pricing carbon makes these investments more possible.”
Economists have long argued that a carbon tax is the most cost-effective way to fight climate change, because it raises the price of carbon-intensive products based on the damage they cause society — so consumers use less of them — and encourages producers to switch to cleaner alternatives if doing so costs less than paying the tax.
Supporters also say carbon pricing is the only policy that can reduce emissions in all sectors, including electricity, transportation, and manufacturing.
“There is not any scenario where we lower carbon to the level we need to and don’t include a price on it,” Rep. Sean Casten, D-Ill., a freshman who was previously a clean-energy businessman and scientist, told the Washington Examiner.
That argument gained a major endorsement this month when a bipartisan coalition of former Federal Reserve chairmen and top economic advisers to recent presidents of both parties jointly endorsed a federal carbon tax, one that would distribute all of the revenue to American households to protect them from higher energy prices.
The economists view such a “carbon tax and dividend” model as the most politically palatable because it does not spend the proceeds of the tax on other things, such as government-funded clean energy investments or offsets of other taxes, but rather sends them back to the public. American oil and gas companies ConocoPhillips and Exxon recently donated a small amount of money to an advocacy group backing this approach.
“A bipartisan group of economists agree placing a price on carbon is an efficient way to lower emissions and combat climate change,” said Sen. Chris Coons, D-Del., who introduced a carbon-tax-and-dividend bill in December with former Sen. Jeff Flake, R-Ariz.
Other Democrats have a more nuanced stance, saying carbon pricing is essential but the revenue must be used to relieve the working class, either through a direct payment or by cutting payroll taxes.
“Carbon pricing is absolutely necessary from an economic perspective,” Rep. Ro Khanna, D-Calif., a “Green New Deal” supporter, told the Washington Examiner. “The question is, who does the price fall on? I would make sure the price is falling on polluters and multinationals who can afford it and does not become a regressive policy.”
Supportive Republicans, meanwhile, see an opening if progressives continue to downplay carbon pricing in favor of other “Green New Deal” priorities.
“Obviously, conservatives will oppose the Green New Deal, assuming it will be a big-government arbitrary set of regulations,” said former Rep. Carlos Curbelo, R-Fla., who introduced a carbon tax bill last year before losing re-election in a left-leaning district. “But it gives conservatives some room to start considering and developing their own ideas, and that’s where a market-driven approach like carbon pricing can really blossom.”
