College Republicans’ misguided support for a carbon tax

By Elliott Raia and Nicolas Loris | The Daily Signal

In what many view as a stark about-face, College Republicans across the country are endorsing a carbon tax to address climate change.

As one young Republican put it, “I think students really want to have a solutions-based discussion.” If that’s the case, the conversation should be over before it begins, because a carbon tax is a costly non-solution.

For years, many on the political left have sung the praises of pricing and regulating carbon dioxide, no matter the cost. Several notable economists on the right and now various chapters of the College Republicans are picking upthe same torch by endorsing a carbon tax.

Specifically, they are endorsing the Climate Leadership Council’s proposal for a gradually increasing carbon tax beginning at $40 per ton.

The pitch goes that a carbon tax is a “free-market solution” as the government places a price on carbon dioxide emissions to internalize a negative externality.

Rather than have a messy hodgepodge of policies of regulations and subsidies to reduce carbon dioxide, all companies would be subject to the same gradually increasing carbon fee.

Thus, the market would determine if it were more economical to build a coal-fired power plant (and pay a fee for the carbon dioxide emissions it generates) or a handful of wind turbines.

Of course, companies would simply pass those higher costs onto American families and businesses. In response to those concerns, carbon tax proponents like the Climate Leadership Council propose to give the tax revenue back to families in the form of a dividend. They predict about $2,000 per family of four per year.

Like every other regulatory or subsidy scheme to reduce carbon dioxide emissions, a carbon tax is by no means a free-market solution. It is egregious to call it a solution at all.

Eighty-two percent of all energy consumed by Americans comes from conventional sources, such as coal, oil, and natural gas. Levying a price on carbon dioxide will directly raise the cost of electricity, gasoline, diesel fuel, and home heating oil.

But the economic pain does not stop there. When considering the impact of a carbon tax on individuals, it is important to note that carbon is intertwined in all parts of life. Energy is a necessary component for just about all of the goods and services consumed, so Americans will pay more for food, health care, education, clothes—you name it.

Even if Congress implemented a plan to give the revenue back to the people (a big “if,” given all of the special interests clamoring for a new revenue stream), Americans stand to lose much more for all of the higher costs they would incur.

Recent research suggests that by 2030, with a $37 per ton carbon tax, the country would experience an aggregate gross domestic product loss of more than $2.5 trillion—or more than $21,000 in income loss per family. There would also be a peak employment shortfall of more than 1 million jobs with over 500,000 lost in manufacturing.

A rebate check isn’t going to cover that.

Even with such drastic economic impacts, the environmental outcomes would not be the solution to climate change they are advertised to be. As mentioned, the alleged reasoning for the carbon tax being a conservative policy is that the tax internalizes a negative externality.

Externalities are the costs or benefits imposed on a third party that was not part of the market transaction, such as air pollution that imposes environmental and health hazards. If you tax or regulate smog, you want there to be less smog.

The purpose of taxing carbon dioxide is not because of its impact on human health, but because of its alleged contribution to climate change. Taxing carbon dioxide emissions, however, will not result in any meaningful abated warming.

Assuming the accuracy of the models, if the U.S. eliminated all of its carbon dioxide emissions, the reduced warming would be 0.137 of a degree Celsius by the end of the century, per the Model for the Assessment of Greenhouse-gas Induced Climate Change developed through funding from the Environmental Protection Agency.

If the entire industrialized world followed the U.S., warming would still only be reduced by 0.278 of a degree.

For those whose goal is to reduce global emissions, the real source is not in America and the developed world, it is the developing world. In 2015, developing countries were the source of more than 63 percent of global carbon emissions, and they are showing no signs of slowing down. Good luck telling the developing world to stay undeveloped.

With more than 1 billion people still suffering from the very tangible consequences of energy poverty, very few developing countries are likely to show concern to the far-off and widely unknown reactions to anthropogenic carbon dioxide emissions.

Yes, developing countries are spending money on green technologies, but they’re also building a lot of new coal plants.

The reality is a carbon tax is another big government regulatory scheme. As Benjamin Zycher, an American Enterprise Institute economist, emphasized in his takedown of the Climate Leadership Council’s plan, the carbon tax “would increase the government allocation of resources and thus the size of government.”

In short, a carbon tax is anything but free-market or conservative.

Image courtesy of Public domain

2 thoughts on “College Republicans’ misguided support for a carbon tax

  1. A Vermont carbon tax, harming working Vermonters and the elderly while having no measurable effect on climate change.

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