The most important thing about a carbon tax plan proposed last week may be the people behind it: prominent Republicans like James Baker III, George Shultz and Henry Paulson Jr. Their endorsement of the idea, variations of which have been suggested before, may be a breakthrough for a party that has closed its eyes to the perils of man-made climate change and done everything in its power to thwart efforts to reduce greenhouse gas emissions.
This gang of Republican elder statesmen — they call themselves the Climate Leadership Council — is not made up of the usual environmentalists, which is why their proposal might gain traction, though probably not right away.
Their proposal would tax carbon emissions at $40 a ton to start and would be paid by oil refineries and other fossil fuel companies that would pass costs on to consumers with higher gas and electricity prices. The money raised would be returned to Americans through dividend checks; a family of four would get about $2,000 a year to start. This would help people adjust to higher energy prices and give them an incentive to reduce consumption or switch to renewable sources of energy. Most lower-income and middle-class families would get back more than they pay in taxes. To avoid placing American industry at a disadvantage, imports from countries that do not impose a comparable tax would be subject to a per-ton tax on the carbon emitted in the production of their products, while exports to those nations would not be.
Scientists and economists have long argued that putting a price on carbon would encourage conservation and investment in renewable energy. Ireland, Sweden and British Columbia already have carbon taxes. The European Union, Quebec, California and Northeastern states like New York and Massachusetts have adopted cap-and-trade systems that use emission permits to lower emissions over time.
The last serious effort to impose a national price on carbon came in 2009 with cap-and-trade legislation by Edward Markey and Henry Waxman, both then Democratic House members. The bill passed the House, but never received a vote in the Senate. Since then, Republican control of one or both houses of Congress has thwarted ambitious climate legislation. As a result, President Obama turned to administrative actions to reduce emissions, including the Clean Power Plan and higher fuel-economy standards for cars and trucks. Those regulations and standards are now on the chopping block under the Trump administration.