Climate Market Solutions
Dear Editor: Earth Week is an opportunity for us to each evaluate what we can do to safeguard our warming world. We can make personal choices to lower our carbon footprints. We can advocate for municipal policies that will influence our collective community footprint directly to Assembly members, through sharing ideas with the Sitka Climate Action Task Force, or through business and Tribal leaders. We can lobby our state and federal elected representatives to enact climate-protective legislation. President Biden has made climate action a priority, but he has not yet incorporated a price on carbon in his plans.
Thirty-five hundred economists have called for an increasing price on carbon as an efficient market-based mechanism to quickly begin the transition to a fossil-free economy. If fossil fuel producers are charged a fee at the point of production (oil and gas well or coal mine), they would not be hurt since they will pass the cost on to consumers, power plants, and carbon-intensive industries. However, investors, applied scientists, and businesses would react to this price signal by developing or switching to low carbon sources to save money. The most equitable plan for a carbon fee is to return the net proceeds to households, so that poor and middle class Americans would receive a monthly dividend that would cover or exceed the increased prices that will result from a fossil fuel fee. As the fees increase annually, the dividend increases. The Energy Innovation and Carbon Dividend Act was reintroduced last week as HR 2307 with 35 Democratic co-sponsors.
Despite bipartisan support in the last two Congresses, no Republicans have co-sponsored this bill to date. However, many conservative groups have called for a market approach to climate solutions. These include the national Chamber of Commerce, the American Petroleum Institute, the Business Round Table, the Commodity Futures Trading Commission, and the Climate Leadership Council. Two market approaches exist – 1) a carbon fee and 2) cap and trade, in which polluters pay to pollute by off-setting their emissions by having others sequester carbon, e.g. by stopping deforestation. Cap and trade regulations have three disadvantages: So far, the off-set costs to polluters are not commensurate with the social cost of fossil fuel pollution in global warming costs (storm, flood, fire, or sea level rising damages) or health effects; no standard international enforcement or surveillance mechanism exists to guarantee the carbon sequestration; and continuing pollution does not protect marginalized communities whose health is affected by nearby polluting industry or power plants. As environmental justice advocates point out, marginalized communities are rarely helped by the cap and trade market mechanism. In contrast, a carbon fee and dividend can help poor communities by decreasing pollution and by putting money in their pockets to spend as they choose. In addition, the carbon fee and dividend mechanism incorporates a border tariff to leverage similar carbon pricing in countries trading with us. The European Union will charge border tariffs for U.S. goods in 2023 if we have not instituted comparable carbon pricing in the United States.
Carbon fee and dividend is efficient in getting us to a 50% reduction in fossil fuel emissions by 2030, on our way to net zero by 2050 in conjunction with other solutions. It is the best first step that can have an immediate effect. If you have five minutes this week, call Murkowski, Sullivan, and/or Young to request their support for carbon pricing. It’s easy using cclusa.org/call.
Kay Kreiss,
Sitka Citizens’ Climate Lobby
