A better way to tax carbon

Danskammer Generating Station in Newburgh

Earlier this week, the Trump administration put the nail in the coffin of the Clean Power Plan, via a Monday announcement from EPA chief Scott Pruitt that his agency was moving to repeal the Obama-era carbon emissions regulation, full stop.

“The past administration was using every bit of power and authority to use the EPA to pick winners and losers and how we generate electricity in this country. That’s wrong,” said Pruitt, a longtime foe of the plan in the courts, with zero regard for irony.

If we fail to pick winners and losers in the increasingly high-stakes game of climate roulette, Nature will be happy to pick them for us. Losers like Houston. Losers like Puerto Rico. Losers like lower Manhattan, inundated in 2012 by tidal flooding from Hurricane Sandy. Losers like our own little Prattsville, all but swept away in the 2011 Irene floods.

Advertisement

But we need not despair. The EPA was never the only way.

Plenty of critics have called the Clean Power Plan heavy-handed, and so it is. Even for its authors, it was a second-best choice, using the nation’s top environmental cops to set state-by-state mandates for power companies, instead of giving them solid financial incentives to come up with their own solutions. There was supposed to be a better way. Congress was supposed to act.

Back in 2009, there was a spirited fight in Congress over cap-and-trade legislation designed to harness the power of the market, rather than the regulatory weight of the EPA, to reduce emissions. Dubbed the American Clean Energy and Security Act, it was a cap-and trade plan that sought to create incentives for reducing emissions. But the proposal, which had begun life as a rare alliance between environmentalists and ideological conservatives, quickly became a target of right-wing contempt and a favorite Tea Party whipping boy. Once the phrase “cap-and-tax” began trending on conservative Twitter, it was all but over. In the end, the House of Representatives narrowly approved ACES, but it never made it to the Senate floor.

Over the whole cap-and-trade debate, the threat loomed: If Congress does not act, the EPA will be forced to. After the cap-and-trade bill imploded, the Obama administration reluctantly took up the torch that Congress had dropped, and the Clean Power Plan was the end result.

Now, perhaps predictably, the Clean Power Plan is headed to join ACES in the scrap heap. The fate of the Clean Power Plan is a reminder that any action that can be accomplished by executive fiat can be undone. Perhaps not easily, because the path through the courts is often long and winding, but with a decisiveness that has so far eluded Congress on the knotty issue of climate.

There is still another proposal afoot to scrap altogether the idea of regulating carbon with the blunt stick of law enforcement, and replace it with an ingenious recipe for deploying the carrot — a carrot soufflé, if you will. The plan, released in February by the Climate Leadership Council, has backing from a decidedly conservative, Republican, corporate and deeply old-school set. Among its authors are former secretaries of Treasury and state for four Republican presidential administrations; if the world has wobbled so far off its axis that you’re feeling nostalgic for the Reagan administration, this is what a few of them have been up to lately. Another is Rob Walton, for 23 years the chairman of Walmart.

The proposal is this: Let’s tax carbon. (Yea, the loathsome T-word.) And then let’s take all the money we collect, and split it up equally among all Americans, via dividend checks. It’s a step down the road toward Universal Basic Income. I fervently hope that after years of Congressional dithering, its time has finally come.

Here in New York State, we already have a carbon tax of sorts. It’s called the Regional Greenhouse Gas Initiative, established in 2009, and it’s a pact between nine Northeastern states to create a market for a gradually shrinking number of carbon emissions allowances, auctioned quarterly to power companies. The proceeds from RGGI — almost $1 billion, to date — fund a grab bag of clean power, environment and energy efficiency programs. Tracking the impact of legislation is a slippery task, but peer-reviewed research says that RGGI has indeed lowered emissions in the Northeast.

Full disclosure: I have a low-interest NYSERDA loan for insulating my drafty old Victorian, and recently bought a plug-in hybrid with a state tax refund attached, so I’ve benefitted personally and financially from RGGI. I like my spray-foamed attic, and I’m glad New York State is doing something to create green incentives for power companies, but it’s not a perfect system. Although RGGI-funded perks and rebates do make their way into the hands of energy consumers, and thereby reimburse at least some of them for the RGGI costs the power company has passed on to them, the program imposes costs on all energy consumers across the board, and hands out benefits to a few. It creates — wait for it — winners and losers.

More disturbingly, it creates a pile of attractively slushy funding. Gov. Andrew Cuomo has already raided the RGGI fund to make the state budget numbers work, sparking howls of protest from environmentalists, and deafening silence from the millions of taxpayers who don’t really know what RGGI does because it’s complicated. So did his predecessor, David Paterson.

It is exactly these foreseeable dilemmas that the Climate Leadership Council’s plan seeks to avoid, by tying the carbon tax to a universal dividend. The genius of this kind of tax is that it doesn’t need to fund anything at all in order to work. It can be, in the parlance of economists, “revenue neutral.” If a carbon tax of $40 a ton were levied, and every red cent of it turned over directly to every American with a valid Social Security number, the resulting incentive to lower carbon emissions would probably spur more clever efforts by power companies to green the grid than even the most stringent EPA regulations.

The imminent downfall of the Clean Power Plan does not have to be cause for despair, for Americans who want to see the nation take real action on reducing emissions. We already have a better option. Now it’s on us to push for it.

Lissa Harris is the former editor of the Watershed Post. She lives in Margaretville with her wife and daughter. Send her Catskills news tips at lissa.e.harris@gmail.com

There is one comment

  1. Lou

    Everything always sounds great when you are giving away other peoples money. How about: If a tax of $40 per month per illegal immigrant were levied on municipaliies, and every red cent of it turned over directly to every American with a valid Social Security number, the resulting incentive to fix the immigration problem would probably spur more clever efforts……………….

Post Your Thoughts