Carbon Tax Needed to Protect Us from Coal

By Tamara Staton, Laura Carver and Philip Carver

As the Oregonian noted in an editorial on proposed coal terminals, “the gnarly question…will be… about the implications of exporting coal to Asia as Oregon cuts back on coal’s use and bets on renewable energy.”

Future Disasters Loom

Those implications are devastating: Shortages of water because of prolonged droughts, which will also decrease food supplies in a world already struggling to feed itself; collapse of the food chain in oceans as acidification destroys small shell-making creatures; displacement of millions from rising sea levels; increasing numbers of disasters from extreme-weather events. In short, a world unlike the one humans have been accustomed to.

Lack of a comprehensive U.S. policy to address the risks of global warming is the source of the problem.  Federal action is already underway, but it is haphazard. As directed by the Supreme Court, the U.S. Environmental Protection Agency is regulating carbon dioxide emissions sector by sector. While better than waiting until catastrophic climate changes are irreversible, command-and-control regulation of CO2 emissions will be ineffective and inefficient.

An economically efficient policy would place a price-adder (tax) on fossil fuels based on their carbon-content.  Rep. Pete Stark (D-CA) has introduced legislation to price carbon emissions — the Save Our Climate Act of 2011, H.R. 3242.  Revenue is collected at the point of first sale or import. In the first ten years, the IRS would return 80 percent of the revenue to the public on an equal, per-person basis. The other 20 percent would go toward deficit reduction.

Adjust the Market to Save the Planet

The tax starts at $10 per ton of carbon dioxide and increases each year by an additional $10 a ton.  $10 per ton would raise the price of gasoline about 12 cents per gallon.  The tax would erase fossil fuels’ artificial price advantage over energy efficiency and low-carbon energy sources.  The Carbon Tax Center estimates such a tax would reduce U.S. emissions 25 percent by the year 2020.

H.R. 3242 would shield most households from an increase in the cost of energy and other goods.  At the same time, it will provide economic incentives to drive producers and consumers away from coal, oil and gas.  It is a price signal that will move massive amounts of investment toward clean-energy technology and energy efficiency, creating many new jobs.

By providing the incentive for more private investment in clean energy, the carbon tax would reduce the need to give subsidies and tax breaks for renewables. The government would also extricate itself from the game of picking winners and losers in the low-carbon technology race.

The legislation would also impose border adjustments on imports from nations that do not have equivalent carbon pricing, thereby protecting American businesses from unfair competition.  Passage will encourage China and other countries to apply similar carbon fees to avoid tariffs on their imports.

In the long run, saying “no” to an export facility will not stop the world from using coal, but a price on carbon will.Φ

Tamara Staton, Laura Carver and Philip Carver are members of the newly-formed Portland Chapter of the Citizens Climate Lobby.