May 2017Policy

Carbon fees/taxes debated in Metro DC climate committee

For the last month, the DC-DSA Climate Change & Environmental Justice Committee (CC&EJC) has focused roughly half of our collective energy on promoting the April 29 People's Climate March.  Approximately another half has gone into organizing an April 28 panel discussion among prominent researchers and political activists on how to build a socially just and environmentally sustainable economy.

Our last full committee meeting back in March, however, featured a debate that has been underway on the left and among environmentalists for the last several years, over the pros and cons of a "carbon fee and rebate" system to fight climate change.

Speaking in favor of a carbon fee and rebate plan at our March 26 meeting at Gordon Biersch Restaurant near Gallery Place was Max Broad of the Citizens Climate Lobby (CCL).  Speaking against the idea was Mike Ewall, founder and director of the Energy Justice Network (EJN), an organization that seeks to help local communities fight against the siting and operation of dirty energy facilities and other environmentally polluting facilities on a site-by-site basis.

CCL, for which Broad spoke in the debate, is a rapidly growing nationwide organization seeking to mobilize individual Americans to advocate for climate-friendly policies.  The organization's board of advisors includes, among other prominent people, outspoken climate researcher Dr. James Hansen, former Reagan administration Secretary of State George Schultz (who now heads up a task force on energy policy at the conservative Hoover Institution), noted oceanographer and author Dr. Sylvia Earle, actor and philanthropist Don Cheadle, and former Obama administration officials Dr. Steven Chu (who served Obama as Secretary of Energy) and David W. Titley, who in 2012-2013 was NOAA's chief operating officer.

CCL's web site states that nonpartisanship is one of its key organizational values, and in his presentation to DSA members Broad argued in favor of the carbon fee and rebate system primarily on the grounds that it gives Republicans in Congress an opportunity to acknowledge the existence of global climate change and advocate for policies to address it, without destroying their careers by doing so.

Under the "carbon fee" proposal that CCL is promoting, Broad said “it's important to call it a 'fee' instead of a 'tax,' "given the loathing many Republican conservatives express for anything involving taxes -- the government would impose a charge on carbon-based fuels for every ton of CO2 or CO2 equivalent these fuels generate. The money collected would then be rebated entirely, or virtually entirely, to Americans on a per-capita basis.

In effect, the rebates would insure that lower-income people, who would pay the largest fraction of their incomes for more costly gasoline and electricity, would receive more money from the fee-and-rebate system than they put in, making the scheme economically progressive and socially equitable.

Yet what potentially makes the idea attractive to conservatives, Broad indicated, is the fact the system, by making carbon-based fuels more expensive relative to renewable energy sources, might bring about CO2 reductions largely through market mechanisms, and without the need for a Big Government bureaucracy.  The fact that the plan is designed to be revenue-neutral overall also may help to meet traditional Republican objections to "tax-and-spend liberalism."

The idea of reducing national emissions of greenhouse gases through a carbon fee is one that both conservative and liberal economists have largely agreed on.  This increases the probability that a bipartisan congressional majority might be formed to get a fee-and-rebate proposal enacted into law.  But the main merit of the plan, Broad suggested, is that it gives Republican lawmakers an opportunity to "come out" on climate change as an issue.

A few years ago, Broad noted, a Republican representative from North Carolina, Rep. Bob Ingliss, dared to support the idea of tackling climate change and was easily defeated by a more orthodox conservative in the next Republican primary.  But in recent years, by approaching the issue via the idea of carbon fees, several Republicans have been able to join the bipartisan Climate Solutions Caucus, without being removed through primary challenges.

In order to make progress on the climate issue, Broad noted, CCL is trying to recruit both Republicans and Democrats to join the Climate Solutions Caucus in the U.S House of Representatives, with each new member from one of the major parties having to be matched with a new member from the opposing party.  The goal is to ensure that as the caucus continues to grow in membership, it will serve as the seed of an expanding bipartisan consensus on climate change, ending the partisan gridlock that at present dooms effective legislation on the problem, especially given Republican control over both houses of Congress.

At the end of the debate, Broad distributed copies of a petition that he urged DSA members to send to our local representatives in DC, Maryland and Virginia, urging them to join the Climate Solutions Caucus and stating, "We hope this equal balance of Republicans and Democrats will allow the caucus to forge effective solutions that will help protect our planet."

In his argument against the carbon fee and rebate system, Mike Ewall argued that the immediate adoption of carbon taxes and/or fees, particularly at the federal level, would be a mistake for several reasons.

First, Ewall stated, the use of a market mechanism such as a carbon tax to reduce greenhouse gas emissions is an overly blunt instrument for getting at the sources of climate change.  There is a risk that by raising the market price of carbon, a carbon tax and/or fee would not only make renewable energy sources such as wind power and solar energy more attractive to consumers and business owners; it also would favor energy from nuclear power plants and other energy sources that Ewall argues are even worse than coal fired generators, such as waste-to-energy incinerators.

In addition, Ewall argued that market-based mechanisms such as carbon taxes will not bring about changes in energy consumption and production fast enough to tackle the climate crisis.  In fact, he said that given the current corporate control over electoral politics, it is likely than any federal legislation that Congress can enact in the near future will be fatally flawed.  Therefore the best way forward in terms of curbing greenhouse emissions causing climate change, in Ewall's view, is through grassroots, community-based campaigns to shut down polluting facilities, one by one, and in this way to "decimate" dirty industries.  A major reform of the political system also is needed before any good climate legislation can be passed, Ewall added.

During the Q and A session that followed Broad's and Ewall's main presentations, some DSA members argued that if a carbon fee and rebate program only insures rebates of the money collected to U.S. citizens, as seems probable given the anti-immigrant sentiment that Donald Trump and his supporters are promoting, then low-income undocumented immigrants would receive no rebates at all, making the plan inequitable.

If environmentalists and other advocates of a municipal fee and rebate plan can get such a plan adopted by the District Government, as a number of green and progressive groups are currently proposing, another equity problem might be raised because of suburbanites who work and shop in the District having to pay higher prices for products here, but not receiving rebates because they are not D.C. citizens.

On the other hand, at least one DSA member present at the debate challenged Ewall's contention that the use of carbon fees to trigger market mechanisms for reducing greenhouse gas emissions would be too slow to tackle climate change, whereas communities fighting against unwanted fossil fuel plants on a case-by-case basis would supposedly be faster.  It is a fact, for example, that market mechanisms in combination with some outrageous government subsidies have brought about a remarkably quick adoption of personal computers, cell phones and other electronic devices in our economy since the 1980s -- while nearly dooming some older business sectors such as independent bookstores to extinction.  It's not clear that higher market prices for fossil fuels cannot facilitate a similar transition, but in a more positive direction.

In reply, Ewall repeated his opposition to carbon fees, but did admit that the combustion of coal by electric power plants is declining rapidly thanks in large part to completion from cheap natural gas extracted through fracking -- an indication that market mechanisms can sometimes facilitate rapid technological change.

The debate ended without the CC and EJ Committee voting either against or in favor of the carbon fee and rebate idea.  Our committee is committed to taking immediate action on climate and environmental justice-related issues where immediate action seems justified and feasible; however, as a committee we are also committed to engaging in socialist education (and self-education) on environmental issues.  In inviting both Broad and Ewall to address the merits and demerits of the carbon fee and rebate idea, we hope to facilitate such education in hopes of helping DSA members to become more informed on environmental issues and controversies, with the goal of making all of us more effective in the long run.

Washington Socialist readers who want to learn more about the case for carbon fees and rebates may want to access the Citizens Climate Lobby website.  For Mike Ewall's case against the plan, see his EJN web page.

Some details about the plan that neither Broad nor Ewall mentioned in their DSA debate, probably because of time constraints, were laid out in February of 2013 by eco-Marxist John Bellamy Foster in the socialist magazine Monthly Review.  As first proposed by James Hansen, the Monthly Review piece notes, the idea was called a "fee and dividend" plan, and Hansen was insistent on the notion that the fees should be fully returned to U.S. citizens on a per capita basis, with the parents of children receiving full refunds for themselves, plus half refunds for each of their children.

In 2009 testimony before Congress, Hansen predicted that based on 2007 prices, a carbon fee of $115 per ton of CO2 emissions -- which would raise average gasoline prices by $1 a gallon, and average electricity prices by 8 cents per kilowatt --would generate roughly $670 billion in revenue annually.  This would make it possible for individual adults who are "legal US residents" to receive rebates of $3,000 apiece and a family consisting of two adults and two children to receive some $9,000 a year.  The program that Hansen proposed would incur only minor administrative expenses, he predicted, and these could be easily covered by minor transfers from the Pentagon's swollen budget.

As proposed by Hansen, the carbon fees would begin at just $15 per ton of CO2 emissions, but escalate rapidly by $10 per ton per year.  The fact that the scheme would be revenue neutral and an estimated 60 percent of the population would get a net economic benefit from it, Hansen argues, would make it politically possible to increase the fee amounts to the level where they would generate significant reductions in carbon emissions.

In other commentary on the topic, Hansen has predicted that "Economic modeling for the U.S. shows that [even] a mere $10/tonCO2 fee, rising $10 each year, would reduce emissions 30 percent after a decade-more than a factor of 10 greater than the oil carried by the proposed Keystone XL pipeline."

For more on Hansen's idea as Monthly Review has summarized it.

In recent years, a number of environmental organizations and some progressives, as well as a growing number of conservatives who are cited on the CCL's web site, have come to endorse the "carbon fee and rebate" or "carbon fee and dividend" idea largely as Hansen proposed it.  However, enthusiasm for carbon fees is hardly universal.

One persistent critic of the idea is David Roberts, a veteran reporter on energy and environmental issues who formerly worked for Grist, but who has recently moved to Vox where he has a regular blog.  In a Grist article titled "10 Reasons a carbon tax is trickier than you think," Roberts has expressed several objections to carbon taxes that resemble what Ewall argued before our DSA committee on March 26.

However, he added another one that Ewall did not mention, except indirectly:  the risk that conservative Republicans who like carbon fees will demand the dismantling of other, existing ways to handle fossil fuel pollution -- such as EPA regulations and government incentives for investments in renewable energy, for example -- in exchange for their support of carbon fees as a market-based solution.  Roberts repeats the same point in a Vox blog post of April 17, 2017, in which he claims that "Democrats are being pressured to support a 'bipartisan' carbon tax bargain no Republicans support."

For more of Roberts' argument, readers should do a web search for "David Roberts" and "carbon fees" or "carbon taxes," and the hits should include a number of his blog posts.

In the meantime, what's happening to proposals for state-level or municipal-level carbon fee and rebate plans that are currently under discussion in DC and Maryland?  The Chesapeake Climate Action Network (CCAN) and 350.org have been active recently in promoting this approach to climate change in both jurisdictions.  At least in the case of the District, however, the prospects for carbon fee legislation are somewhat muddied as of this writing.

Some months ago, CCAN organizer Jeremiah Lowery got an impressive array of local environmental organizations and some significant social justice advocacy groups to sign a letter supporting the concept.  These included CCAN itself, the DC chapter of CCL, the DC chapter of the Sierra Club, Interfaith Power & Light (for DC, Maryland and Northern Virginia), the DC Environmental Network, Moms Clean Air Force, and also the DC Catholic Conference, Black Millennials for Flint, ONE DC, the Working Families Party in DC, local 32 BJ of SEIU, and the Washington Legal Clinic for the Homeless.

However, some of these organizations evidently have not signed on to Hansen's original plan for a revenue-neutral program with all fee revenues being rebated to local residents. Instead, some of the DC backers of carbon fees apparently want some of the money collected to be allocated to programs for the homeless.  As of early April, similarly, the local Sierra Club chapter, apparently in response to national Sierra Club policy, was demanding that some of the revenue go for the promotion of renewable energy programs.

The details of just who within the coalition is arguing for what are unclear, but at Washington Socialist press time a "Brass Tacks Committee" of supporting organizations was reportedly still trying to hash out the details of how the money collected would be distributed.  One individual involved in the negotiations said that although the majority of the money collected from the DC carbon fees would be returned to residents, some members of the Brass Tacks Committee were arguing for somewhere between 10 percent and 30 percent of it to be reserved for other causes.

How quickly carbon fee and rebate legislation is likely to move, either at the national or the local level, therefore is unclear as of this writing.  The Washington Socialist will try to address additional developments in the carbon fee debate as they occur.

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