'Fee and dividend': how to reduce CO2
TO THE EDITORS:
President Obama's State of the Union message included a challenge to make the conversion to clean, renewable energy follow the template of the "race for space" from my childhood.
In that situation, everyone from our NASA scientists down to the kids on my block, threw their support into the task. We all took pride in putting the first man on the moon.
Today, the stakes are even higher: No less than ensuring a viable environment for our nation, for the world, for all species on Earth and for generations into the future.
Some members of Congress might not be aware that already a plan is in the formative stages that uses the natural forces of our open market economy to achieve this goal. It is not cap and trade, but "fee and dividend."
How it works is: CO2-creating energy producers are charged a fee for the amount of CO2 pollution generated by their processes, at the sources of materials withdrawal. This money offsets the cost increases that companies might pass on to consumers, since the collected money fund is distributed across the board, equally to all citizens in the form of a dividend.
The goal is to make it more appealing and cost-effective to research and produce clean, renewable energy than the climate-destroying fossil-fuel energy.
Between the record heat and numerous climate-related disasters that unfolded in 2012, it's clear that our nation must take steps to reduce the greenhouse-gas emissions that are warming up our planet.
Lacking a legislative solution, the president will turn to regulation.
Republicans, who abhor regulation, should answer the climate challenge with the free-market approach of a revenue-neutral carbon tax. I think "fee and dividend" fits. Exxon, Shell and BP have expressed support for a price on carbon.
What's holding Congress back? Many conservative economists support a revenue-neutral carbon tax, including Art Laffer, economic adviser to President Reagan, and Greg Mankiw, economic adviser to President George W. Bush and candidate Mitt Romney.
Stated another way, returning revenue from a carbon tax to consumers would speed the transition to clean energy without inflicting economic pain on American households. Border-adjustment tariffs on goods from nations that don't price carbon would protect American businesses and give other countries a strong incentive to follow our lead.