Carbon pricing needed to address climate change

Only 2 of 9 members of Mass. delegation are on board

IT IS SOMETIMES DIFFICULT to see the path forward on climate change.  There are so many variables and misdirections. How do we address cow belches – one of the most problematic methane offenders? How do we get developing countries to accept limiting their carbon production without also asking them to slow their development?  How do we get countries whose oil and gas reserves are their primary economic resources to stop pumping them out of the ground?  What about states here in the US whose economies are built on coal?  Why can’t we rely on ingenuity and technology to create a silver bullet instead of having to negotiate all this politically difficult terrain?  What do we do about climate change deniers?  The questions go on.

We can’t answer all of these questions.  In fact – we can’t answer most of them with certainty.  However, that doesn’t mean we give up because the entire plan has not been written. It means we develop a strategy to address the ones we can, and let solutions to the others evolve.

For all climate change’s difficulties, there is at least one recent example where advocates have waged and largely won this kind of battle before: with respect to ozone depleting chlorofluorocarbons (CFC) from aerosols and refrigerants.  The climate change challenge is obviously a much more complex issue with more far reaching consequences on many different levels.  But the ozone depletion issue (and the Montreal Protocols that sprung from it) is instructive to climate change advocates.  In addition to providing some assurance that the world as a whole can act when it feels the urgency – it showed that tackling the problem in stages is a viable strategy.

The Montreal Protocols, enacted in 1987, started with what the scientific community knew was a major looming threat – that CFCs were destroying the ozone layer – and addressed just that one issue.   As effective actions were demonstrated to be working, the protocols were amended (including adding other restricted agents) in 1990 and again in 1992.  In the meantime, a series of technological solutions and alternative products were developed that were readily accepted by consumers.  Along the way, many countries tried to back away from the protocols, proposing to “protect” certain industries, but most eventually came to see the good sense of them. Although the Montreal Protocols continue even today to be tweaked and improved, the battle has been largely won: a 2005 UN-sponsored Intergovernmental Panel on Climate Change review of ozone observations and model calculations concluded that the global amount of ozone has now approximately stabilized.

The parallel for climate change activists is that we know that the use of carbon-based fuels contributes to climate change and, once again, we have the ability and ready technological alternatives to reduce our use of it.  As with CFCs in the ozone discussion, reducing the use of fossil fuels is a starting point that other proactive measures can build upon.

However, the cost to our society of cleaning up the environmental impact that fossil fuels create has been externalized: it doesn’t factor in the cost to society (and governments) of cleaning up their environmental impact. That falls to taxpayers – which makes fossil fuels appear quite cheap – and therefore makes the transition to renewables appear expensive.  An alternative to mandating diminished use is to use the market to internalize those costs.

There is currently in congress a bill that does exactly that.  Sponsored by Citizens Climate Lobby ,a group I am affiliated with,   HR 763 – the Energy Innovation Act has been introduced with bi-partisan support in the House, and proposes a fee on carbon that is remitted to citizens as a dividend.  Importantly, this is not a tax – it is a surcharge that internalizes the externalized costs. It doesn’t send money to the treasury, it creates a trust fund that re-distributes it to citizens on a per capita basis.  The bill shares an important feature with the ozone protocols – it provides for monitoring and adjustments based on results.  The initial result will be some cash dividend to citizens.  The long-term result will be that carbon is more expensive – and wind, solar, and other renewable sources will be economically competitive.  The engines of technological creativity will be directed towards them.

It’s not just environmentalists supporting it.  In January, a letter signed by 3,500 economists supporting carbon pricing as the most effective way to address climate change was published in the Wall Street Journal.

There is a target, too.  The IPCC has established 2030 as a goal for the world to cut carbon emissions in half, and 2055 to be at net zero.  The stage is set for a path to be realized – but we need to be doing our share in order to ask others to do theirs.

We don’t know all of the answers to the questions that climate change poses.  We may never solve cow-belches.  But we do know that there are things that we can control that can start us in the right direction on issues – such as carbon pricing – that will be essential to solving the problem.  We should start by taking those steps. And with it, let’s use the market to drive technology to help create additional solutions.

Meet the Author

W. Bart Lloyd

Attorney and advocate, Preservation of Affordable Housing Inc.
As of this writing, only two (Seth Moulton and Jim McGovern) of the nine Massachusetts congressional delegates have signed on as cosponsors.  We need to convince the rest to step up and help make this a reality.

W. Bart Lloyd is an attorney and advocate specializing in the business side of affordable housing in Boston.