What do ConocoPhillips, BP, ExxonMobil and Shell have in common with 3,500 economists? They all support carbon pricing.
That’s one reason why the Fairbanks Chamber of Commerce was interested in hearing about carbon pricing. I am a member of Citizens’ Climate Lobby (CCL), an organization that promotes a carbon fee and dividend approach to addressing climate change. CCL is a bi-partisan group, whose strong point is talking to people from all perspectives about climate change and the effectiveness of harnessing our market economy to reduce our production of greenhouse gases. There are several different bills in Congress that include some kind of fee on carbon. The reason this makes so much sense is that there is currently no cost attached to carbon dioxide pollution. By putting a price on carbon, this “invisible” cost becomes part of the economics of burning fossil fuels, and the market system can help us reduce emissions. By applying the price where the fossil fuel is produced, the economic incentive to burn less fuel, to find efficiencies, and to innovate cleaner solutions happens at every step along the way from production to consumption.
I approached the Fairbanks Chamber of Commerce Energy, Environment and Natural Resources Committee to get some feedback from Fairbanks business owners as to their perspective, both personal and professional, on putting a price on carbon.
The Citizens’ Climate Lobby supports a fee and dividend approach similar to the conservative Climate Leadership Council’s Baker-Schultz Plan. This plan is named after its two most famous proponents, James Baker and George Schultz. Many large corporations, including oil companies, became founding members in 2017, recognizing the value of the risk reduction and innovation incentive that a carbon price would bring. They also prefer a known, predictable price on carbon to government regulations, which are politically unpredictable and expensive to implement. The US Chamber of Commerce recognizes the increasing costs of climate change, and supports a market-based approach to reduce greenhouse gases.
The fee and dividend approach would return income from the carbon fee to households in the form of a dividend. So the plan would be revenue neutral and would not grow government. This is an important point for many.
Here is some of what I heard from the Fairbanks Chamber of Commerce Energy, Environment and Natural Resources Committee members. There was general agreement that climate change is affecting Fairbanks, and other economies on which we are dependent, in negative ways. Locally, there is a need for cheaper energy. With the fee and dividend approach, households would mostly end up getting more back than they would pay in increased costs. The fee would also incentivize cleaner energy production which would improve our air quality. Some members would prefer that the fee go to support technology innovation, rather than be returned to households. However, this approach would grow government spending, and not necessarily reward the most efficient innovations. Some think this approach may make logical sense, but does not have political traction. However, some sort of carbon pricing could be in the next federal reconciliation bill, and this is the time to make sure we get the most efficient, effective form of carbon pricing. Some are worried about international competitiveness. That is a serious concern, and if the U.S. does not adopt some form of carbon pricing, we may soon be subject to carbon tariffs from Europe and other countries that already have a price on carbon. Proposed carbon fee legislation includes a border adjustment, which would charge fees to imports from any country without carbon pricing.
Economists agree that putting a price on carbon is the most important step we can take to address climate change. And now is the best time to do it (or even better, decades ago if we could go back in time). We don’t have good ways for removing the greenhouse gases we add to the atmosphere, and they stick around for a long time. If you’d like to learn more, please go to citizensclimatelobby.org.