US economists led by former US Federal Reserve chair Janet Yellen are uniting in record numbers to
back the idea of a carbon tax as the most effective and immediate way of tackling climate change.
At a time when Democrats including New York congresswoman Alexandria Ocasio-Cortez are pushing a sweeping “Green New Deal” programme to reduce greenhouse emissions, climate change is shaping up to be a major 2020 election issue. The US is the world’s second-biggest emitter of carbon dioxide, behind China.
But Ms Yellen told the Financial Times the Green New Deal was costly, whereas the carbon tax, which would plough proceeds back to the public in dividend payments, would be the “most efficient way” to reduce emissions.
“Global climate change is a very serious problem and it calls for immediate national action,” she said. “If you were to start around $40 a ton and then raise this over time, by more than the rate of inflation, this would be a very effective way of reducing carbon emissions and would more than meet the Paris commitment.”
The carbon tax proposal, organised by the Climate Leadership Council, is a bipartisan effort that has united senior economists from both parties, and now garnered 3,300 signatures from professional economists and academics across the US.
That surpasses previous petitions across the US analysts’ community, such as the 1997 Economists’ Statement on Climate Change, which received 2,600 signatures, and the 1930 Economists Against Smoot-Hawley.
Ms Yellen said a carbon tax and dividend would be more “feasible” and “sensible” than the Green New Deal in its current form. “This is a plan that harnesses markets, it is much more efficient and less costly than methods proposed by the proponents of the Green New Deal,” she said.
Under the terms outlined in the statement, which was first published a month ago, the revenue from a carbon tax would be redistributed to Americans on a per capita basis, which would disproportionately benefit the poorest households more.
The proposal also envisages a carbon border tax that would impose a levy on carbon-intensive goods that enter the US from countries without a carbon price.
Marty Feldstein, a prominent Republican economist and former chief economic adviser to Ronald Reagan, said that economists agreed that carbon emissions were a serious problem.
“Our current method of trying to control carbon emissions by complex regulations is a bad idea, we think it is better to use a price mechanism to do it,” said Mr Feldstein, also one of the signatories.
The chances of passing a carbon and tax and dividend under the current administration are viewed as extremely slim because of US President Donald Trump’s sceptical views on climate change, but the signatories say they hope the policy will gain momentum in future.
“I’m not expecting progress on this during this administration,” said Ms Yellen. “My hope is that under a future administration, whether Democrat or Republican that there will be a call and a greater focus on doing something about climate change,” she added.
Ms Yellen is an adviser at the Climate Leadership Council, which organised the proposal. The group is backed by large companies including ExxonMobil, BP, Shell, General Motors and Unilever, as well as environmental groups such as the Nature Conservancy and World Wildlife Fund.
She said the plan was both environmentally ambitious and likely to attract business support. “Businesses I think, are able to get behind this because it is preferable for most businesses to have a predictable environment in which there are a set of prices . . . rather than have government regulations dictating what technologies must be used,” Ms Yellen said.
The 3,300 signatories include former Treasury secretary Larry Summers, former Fed chair Ben Bernanke, former Clinton economic adviser Alan Blinder, and Christina Paxton, the president of Brown University.
The carbon tax has been criticised by environmentalists because it does not set a cap on total carbon emissions. But the idea has gained consensus as scattered carbon trading schemes around the world have struggled to dent emissions.
Ted Halstead, founder of the Climate Leadership Council, said that returning the proceeds of a future carbon tax directly to households was important to help make the plan “small government” friendly and revenue neutral.
“The most significant part of the statement, is that for the first time in history, there is consensus on what to do with the money,” he said. Next he hopes to get carbon tax legislation introduced by both Republicans and Democrats in the Senate, even though it may be unlikely to become law under the current administration.
“I think it is fair to say that America has two choices, one is the route of the Green New Deal, one is the route recommended by the entire economic establishment, which is the carbon dividend plan,” he added.
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andrei, on 2019-February-16, 11:13, said:
