Corporate Giants Favor New Carbon Tax

The recently launched Climate Leadership Council (CLC) is just shy of six months old and it is already making a big splash. This week it launched a new ad campaign promoting its proposed "carbon dividends program" -- aka a carbon tax. According to a study produced by CLC analysts, the proposal could result in a reduction of greenhouse gas emissions in the U.S. that is almost twice the the rate that would be achieved under policies in force at the close of the Obama Administration.

That's quite a sell. To underscore the broad appeal of its proposal, CLC dubbed its ad campaign "The Consensus Climate Solution" and released a list of "Founding Members" who have signed on. Unilever, Procter and Gamble, PepsiCo and other companies that are making strides on corporate responsibility field are on the list, as are ExxonMobil, BP and Royal Dutch Shell. The list also includes noted renewable energy fan Michael Bloomberg and physicist Stephen Hawking along with Conservation International and The Nature Conservancy.

So, who could hate it?

The Climate Leadership Council plan

The CLC carbon tax -- or dividend plan, as CLC prefers, is deceptively simple. It rests on four "pillars:"

A gradually increasing carbon tax -- to be levied at the point "where fossil fuels enter the economy, meaning the mine, well or port."

Carbon dividends for all Americans -- "All the proceeds from this carbon tax would be returned to the American people on an equal and monthly basis via dividend checks, direct deposits or contributions to their individual retirement accounts."

Border carbon adjustments -- this refers to "trade remedies" that would encourage other countries to impose a carbon tax.

Significant regulatory rollback -- this involves eliminating practically all federal regulations including an "outright repeal of the Clean Power Plan." CLC also envisions that, "robust carbon taxes would also make possible an end to federal and state tort liability for emitters."

Initial reaction to the CLC plan is mixed

Now, let's take a quick look at that CLC study (here's that link again). It was released in coordination with the February launch of CLC under the title, "A Winning Trade," with this subtitle:

How Replacing the Obama-Era Climate Regulations with a Carbon Dividends Program Starting at $40/Ton Would Yield Far Greater Greenhouse Gas Emissions Reductions

The phrase "Obama-era regulations" may a appear to be a bit vague, considering that President Obama's signature emissions-reducing effort, the Clean Power Plan, stalled out in the courts and is all but dead under the Trump Administration. However, the study errs on the side of caution and factors in the impact of the Clean Power Plan as originally scheduled.

Nevertheless, although the CLC carbon tax proposal received some positive reaction, questions were immediately raised.

In a February 8th article, Scientific American explored some doubts about the effectiveness of a $40 per ton starting point for a carbon tax, compared to the effectiveness of Obama Administration policies.

Scientific American cited the Natural Resources Defense Council, which released a statement asserting that a carbon tax alone would be insufficient to reach climate goals, and an analyst with the Brookings Institute who argued that a set-aside to accelerate renewable energy R&D would be needed for the proposal hit its targets.

Also on February 8th, the top science journal Nature published a blog article by Nature Conservancy president and CEO Mark Tercek on the new proposal. In the article, Tercek applauded the proposal (note that at that time the Nature Conservancy was not officially named a CLC Founding Member), but he gently suggested that the devil is in the details.

Here's his take on the "pillar" the proposal that involves returning carbon tax revenue to consumers on a flat rate basis:

...For instance, low-income households spend much more of their budgets on energy than the more well-to-do. To make sure that the combined carbon tax and dividend does in fact have an equal impact on all Americans, perhaps the dividends should tilt a bit toward lower income families.

Tercek also argued that fuel efficiency standards should not be thrown out in favor of a carbon tax, asserting that over the next few years emission standards will "do more to reduce emissions in the transportation sector than a carbon tax," and because they save consumers money.

Reaction to the new ad campaign is not promising

The new ad campaign has provoked renewed criticism of the proposal.

One interesting argument against the flat rate dividend payments is provided by Huffington Post business and environment reporter Alexander C. Kaufman. According to one conservative critic cited by Kaufman, the flat rate would favor urban over rural dwellers:

"...say you’re somebody who commutes to work on the Washington Metro, as I do. I would get a check equal to somebody who has to drive a long way to work every day, who required a four-wheel-drive vehicle because he lives in an area with lots of snow and may have a job that includes heavy hauling, like a plumbing business.”

It's also worth noting that the flat rate of reimbursement does not reward households that invest in energy efficiency or that make an extra effort to conserve energy.

Environmental groups also dug into the plan again and found it wanting. Common Dreams cites Greenpeace...

"...Buried in pages of supposedly 'free market' solutions is a new regulation exempting polluters from facing legal consequences for their role in fueling climate change."

...and 350.org...

"Exxon is signing onto this carbon tax proposal because they know it's dead-on-arrival, but hope it will distract from the ongoing investigations into whether the company lied to the public and its investors about climate change..."

...and Food & Water Watch:

"...This plan being promoted by notable conservatives and their industry allies is particularly absurd: It would scrap many existing pollution controls—common sense rules that tackle carbon emissions at their source—in favor of a market-based scheme that would push added costs onto consumers, not polluters."

One positive note...or not

The highly regarded research organization World Resources Institute is an official Strategic Partner of CLC, and as such they came out with a statement to coordinate with the new ad campaign and the release of the Founding Members' names.

While the Institute's enthusiasm for the CLC proposal is clear, the organization also makes it clear that a carbon tax would have to produce better results than the regulations it replaces, and it cannot be a standalone solution:

“To avoid backsliding, existing carbon reduction policies should continue until a carbon price is put in place that will produce greater emissions reductions. In addition, complementary policies addressing other market failures and non-carbon greenhouse gasses will be needed.”

WRI notes that about 60 countries and sub-national jurisdictions already have carbon pricing in place, and public polling indicates bi-partisan support.

The Nature Conservancy also issued a statement on June 20th in support of the proposal, and in recognition of its now-official status of a Founding Member. Like WRI, The Nature Conservancy exercised a clear note of caution:

As a Founding Member, we support the enhanced dialogue around carbon pricing without endorsing the specifics of the carbon dividend proposal, including details pertaining to the role of other related regulations. We remain open to how best to design such policies and continue to believe there are a range of options for a price on carbon to reduce emissions.

These caveats about the CLC carbon tax from within the group's own stakeholders offer a warning sign that the proposal is at best an incomplete solution for climate change.

Image (screenshot): via Climate Leadership Council.