The most efficient way to combat climate change is to make fossil fuel use more expensive, an International Monetary Fund study found last October. The IMF also said sending the money from a tax or fee on coal and oil straight to citizens would blunt the economic disruption of that strategy.
Announcements such as that are music to John Northrop’s ears.
Northrop is the leader of a Birmingham chapter of the Citizens’ Climate Lobby that has made fossil fuel pricing its focus. The group wants Congress to pass fee-and-dividend legislation that would place an annually rising fee, which others call a tax, on companies that produce or buy fossil fuel such as coal and oil.
“The concept is to drive down carbon use by making it more expensive,” Northrop said. “It’s basically a market-based solution to climate change.”
The fee would be predicated on the amount of emissions a particular energy source emits.
Northrop’s group envisions an an initial fee of $15 per ton of expected carbon dioxide emissions, to increase by $10 every year for the next 10 years. The fee, minus administrative costs, would be sent to households by the Internal Revenue Service to make up for the increased prices on fossil fuel. The monthly rebate is calculated to be about $88 per household in the first year, Northrop said.
Citizens’ Climate Lobby endorses this idea, which is before Congress as House Bill 763, rather than another form of carbon pricing called cap-and-trade “because it is a market-based solution whereas cap-and-trade is government regulated,” he said
The U.S. Environmental Protection Agency says cap-and-trade has two components: “a limit on pollution and tradable allowances equal to the limit that authorizes allowance holders to emit a specific quantity” of carbon or other pollutants.
Last year a large group of American economists, including Nobel laureates, former U.S. Treasury secretaries and Federal Reserve chairs, endorsed the fee-and-dividend idea, calling it the way to go to get fast, substantive change in carbon use. They stated the program would substitute for “cumbersome regulations … and provide regulatory certainty companies need for long-term investment in clean-energy alternatives.” Economists from five Alabama universities endorsed the statement.
The IMF report found that a fee that rose to $75 per ton by 2030 could limit warming of Earth to 3.6 degrees Fahrenheit to avoid the worst effects of warming.
To many conservatives and corporate interests, carbon pricing schemes appear more palatable than government edicts as ways of combating climate change. Last month, Amy Harder of the news site Axios reported that General Motors, Ford, IBM and some electricity producers are among those funding lobbying by the Climate Leadership Council, a coalition that also includes some environmental groups. It endorses a $40-per-ton tax on carbon to cut emissions in half by 2035.
Harder calls this a “long-shot advocacy effort” due to the bitterly divided Congress. Some Republicans are now acknowledging climate change is a problem, she reported, but in a Jan. 21 column she called GOP’s attitude change “partly cosmetic,” because the party has announced a new approach that eschews carbon pricing. Instead, it is “doubling down on a small-government agenda that includes such targets as carbon-capture technologies with a focus on trees, clean-energy funding and conservation, focusing on plastic.”
In addition, she said, “the most vocal Democrats say a carbon price by itself isn’t nearly enough to combat climate change.”
No, it wouldn’t be enough, Northrop agreed, “but it would be the foundation to help incentivize investments in alternative energy to eventually draw down emissions.”
Citizens’ Climate Lobby encourages everyone to listen to all viewpoints on climate change, he said. “That’s why our educational arm is sponsoring a forum Feb. 8 to hear various points of view.”
The apparent uphill battle doesn’t dissuade Northrop, however, who counts on the broad appeal of the Citizens’ Climate Lobby approach to gain increasing support.
The monthly dividends, he said, will take the edge off the necessary cost increases of energy for the poor and middle class, and that extra spendable money each month will ripple through the economy. And the fee on extraction and import of fossil fuels would increase the use of renewable energy sources such as wind and solar, creating jobs, and would force industries to innovate to reduce their emissions by employing advanced technologies and other means.
Northrop’s group was founded in 2007 with a general climate change agenda. “The organization evolved because we felt there must be a market-based solution to take advantage of the reality that we are a market economy and a market culture,” he said.