Earth Equity News

We Should Go Back to Gore's First Idea: A Carbon Tax. Commentary by Elaine C. Kamarch, Politico, September 23, 2009. "On September 15, Senate Majority Leader Harry Reid (D-Nev.) made clear what many environmentalists had begun to fear -- Congress may not conclude work on climate change legislation in time for the U.N. Conference on Climate Change scheduled to take place this December in Copenhagen. This will be seen as a major setback for environmentalists -- not to mention the planet. But it's not too late to salvage the situation. Congress can go back to Al Gore's original idea about how to deal with climate change: Raise taxes on carbon, and cut taxes on work. A carbon tax shift is one of those rare ideas that can take a political liability and turn it into a political asset -- it allows Congress to vote for a tax cut and a tax increase while putting into place the financial incentives we need to transition to a noncarbon future. Here's why.
"[Granted that] energy taxes that go to deficit reduction are nonstarters. In 1993, the Clinton administration's tax on British thermal units suffered a short and brutal death. In its ashes rose a consensus around cap and trade as the best means for dealing with climate change. Because of what it was not -- a tax -- cap and trade looked like a pretty good idea. But by 2008, Americans' faith in markets on which the politics of cap and trade was predicated came face to face with a financial sector that failed massively and thrust them into the worst recession in their lifetimes. The fact is, cap and trade creates a trading market for carbon, a market that will be inherently volatile and that will invite speculation. Practically overnight, Americans' faith in 'letting the market do it' became letting the market invent obscure financial instruments for the purpose of speculating on energy. As one woman I listened to put it, 'You mean we're supposed to trust the fate of the planet to Wall Street?'
"A carbon tax can be designed to accomplish what most environmentalists see as the major advantage of cap and trade -- the 'cap' itself, which guarantees definite reductions in emissions. The tax can be automatically reviewed and raised (or lowered) every three to five years depending on whether it is achieving real reductions in carbon emissions. The purpose of climate change legislation should not be to close the deficit or to give Wall Street another commodity to trade. The purpose should be to affect the economic transformation away from fossil fuels. The next generation of energy entrepreneurs is ready to build large-scale wind farms and solar facilities, but they can't raise the money. A cap-and-trade system that enriches traders but doesn't guarantee a continually increasing price on carbon will not help create the green industries and the green jobs of tomorrow. It has been 30 years since the first congressional hearings on the topic of climate change. Compared with health care, the issue is a mere adolescent. And yet the planet can't afford 30 more years of discussion. A carbon tax shift is a climate policy that is transparent and easy to understand. It can be designed to be revenue neutral and therefore politically palatable. Gore's first idea was the best one. We should go back to it." Elaine C. Kamarck is a Lecturer in Public Policy at the Kennedy School of Government. She served in the Clinton White House where managed the Clinton Administration's National Performance Review, also known as reinventing government. In 2000 was a senior Policy Advisor to the Gore campaign.