Download MEDIA PACKET, SEPT. 8, 2014 U.S. can lead climate fight with

MEDIA PACKET, SEPT. 8, 2014
U.S. can lead climate fight with carbon fee
The road to a 2015 global warming agreement in Paris passes through
New York this month at the UN Climate Summit. The steep cuts needed on
greenhouse gas emissions will require a steadily-rising fee on carbon,
which is possible if we give revenue from that fee back to the people.
As the clock winds down toward a global climate treaty in Paris next year, world leaders –
including President Obama – are gathering at the UN this month (Sept. 23rd) to energize
negotiations and build momentum for an agreement that can prevent the most catastrophic
consequences of global warming.
The primary objective of the Paris treaty is to contain global warming by the end of the
century to 2 degrees Celsius. Going beyond that threshold, scientists warn, will result in
disastrous impacts – sea level rise, crop failures, record heat waves, water shortages, mass
migrations – that will be difficult, if not impossible, for human civilization to adapt to or
manage.
The urgency for nations of the world to agree on steep reductions in greenhouse gas
emissions cannot be overstated. In November, the Intergovernmental Panel on Climate
Change will release its final report summarizing a series of reports that have been released
over the past year, but a draft of that report was leaked last month. The New York Times,
citing the IPCC’s draft, reported:
“Runaway growth in the emission of greenhouse gases is swamping all political
efforts to deal with the problem, raising the risk of ‘severe, pervasive and
irreversible impacts’ over the coming decades, according to a draft of a major new
United Nations report…
“Using blunter, more forceful language than the reports that underpin it, the new
draft highlights the urgency of the risks that are likely to be intensified by continued
emissions of heat-trapping gases, primarily carbon dioxide released by the burning
of fossil fuels like coal, oil and natural gas.
“The report found that companies and governments had identified reserves of these
fuels at least four times larger than could safely be burned if global warming is to be
kept to a tolerable level.
“That means if society wants to limit the risks to future generations, it must find the
discipline to leave a vast majority of these valuable fuels in the ground, the report
said.”
So what are the chances that an effective agreement will be reached to preserve a livable
world for future generations?
Right now, those chances don’t look good.
A team from the Massachusetts Institute of Technology looked at the commitments for
emissions reductions that nations are likely to make with next year’s treaty. Plugging those
numbers into models, the MIT team found that CO2 levels in the atmosphere are likely to
rise much higher than 450 parts per million, the level scientists say mustn’t be breached in
order to keep global warming under 2C. As Inside Climate News reported:
“Indeed, the team predicted that emissions would grow so fast by the year 2050,
that greenhouse gas concentrations would exceed 530 or 580 parts per million by
the end of the century.”
And there’s more discouraging news.
It now looks like an inadequate treaty is destined to be non-binding, with countries setting
voluntary targets. The New York Times reported late last month that the Obama
administration is working behind the scenes to negotiate a treaty that would not require a
two-thirds majority in the Senate for ratification. Any treaty that carries the force of law
needs Senate approval. But, as the Times reported:
“To sidestep that requirement, President Obama’s climate negotiators are devising
what they call a “politically binding” deal that would “name and shame” countries
into cutting their emissions. The deal is likely to face strong objections from
Republicans on Capitol Hill and from poor countries around the world, but
negotiators say it may be the only realistic path.”
The President is doing what he can with the hand he’s been dealt on Capitol Hill, but “name
and shame” will lead to crash-and-burn where the climate is concerned. There must be a
greater incentive for nations of the world to live up to their stated commitments on
emissions reductions and to ultimately go beyond those targets. Finger wagging will not
suffice.
How the U.S. can lead on climate
In lieu of an effective and binding global agreement, the United States must lead by example
and also provide the incentive for other nations to follow our lead. In the absence of
congressional action, the EPA’s Clean Power Plan to cut emissions from electrical power
plants is a step in the right direction. But EPA rules will not provide the kinds of emissions
cuts across all sectors sufficient to ward off catastrophe. Nor will EPA rules provide the
incentive for other nations, particularly China and India, to match our effort.
The solution, supported by conservatives such as former Secretary of State George Shultz, is
a market-based approach known as Carbon Fee and Dividend, coupled with border tariffs.
A recent study from the highly-respected Regional Economic Models, Inc. (REMI), examined
the impact – both environmentally and economically – of a fee on the carbon dioxide
content of fossil fuels, beginning at $10 per ton of CO2 and increasing by $10 a ton each
year. Revenue from the fee was divided equally and returned to households as monthly
payments. Border tariffs on imports from countries without an equivalent price on carbon,
were factored into the study.
Findings from the REMI study should elate both environmentalists and economists: After 20
years, CO2 emissions would drop 50 percent below 1990 levels. Note in the chart below
that Carbon Fee and Dividend will achieve substantially greater reductions in emissions
from electrical generation than EPA regulation. Because of the economic stimulus of
recycling revenue from the carbon fee into the pockets of people who are likely to spend the
money, 2.8 million jobs would be added to the economy. Until now, opponents have claimed
that putting a price on carbon would kill jobs. That myth has been shattered, thanks to the
REMI study.
With carbon fee and dividend, U.S. leadership to cut carbon carries with it the upside of
adding jobs. By applying border tariffs, other nations will have a strong economic incentive
to follow the U.S. lead in pricing carbon. After all, why would any nation allow their
businesses to pay the U.S. government for the cost of carbon when those businesses could
be paying their own government?
A recent editorial from the Washington Post concurred:
Putting a price on U.S. carbon emissions, and applying a charge on imports from
countries without a strong anti-emissions policy, would give China and others an
incentive to implement plans of their own.
The message to other nations would be loud and clear: If your businesses wish to compete
in lucrative U.S. markets, you must put a price on carbon.
Much better than “name and shame,” the border tariff of Carbon Fee and Dividend falls into
the Teddy Roosevelt school of policies: It is a big stick that would allow us to speak softly in
Paris, but get closer to a livable world.
Time to change the reality on Capitol Hill
The catch in this win-win solution, of course, is that it requires Congress to act. Pessimists
and cynics will scoff at such a notion, but if current reality excludes any expectation of
Congress enacting climate legislation, then it is time to change that reality.
It can be changed with newspapers – the fourth branch of government – pushing Congress
to act through editorial endorsement of carbon pricing policy. It can be changed with
citizens, like the volunteers in 175 Citizens’ Climate Lobby chapters across the U.S., talking
to their members of Congress about the importance of taking action on climate change and
getting thousands of letters to the editor published in newspapers throughout the nation. It
can be changed with leaders in business and finance coming together, as they did with the
bi-partisan coalition that issued the Risky Business report this summer, to urge action that
limits the economic fallout of climate change. It can be changed with faith leaders, like Pope
Francis, issuing a moral challenge to care for God’s creation and protect the poor from the
ravages of climate change, a challenge expected soon in the Pontiff’s forthcoming encyclical
on the environment.
While it is too late to enact major legislation like Carbon Fee and Dividend in the 113th
Congress, forward-thinking Republicans and Democrats should work together now to forge
a bi-partisan bill that is introduced and passed early in the next Congress.
Current reality places our planet on a trajectory that leaves too many people sick, hungry,
thirsty and homeless because of climate change. If we alter the reality in Washington – and
pass a fee on carbon that gives revenue back to the people – America can lead the world
toward a safer, more secure future, no matter what happens in Paris next year.
About REMI
Since 1980, Regional Economic Models, Inc. (REMI) has provided economic impact studies
for governmental and private-sector clients including the Atlanta Regional Commission
(ARC), consulting firms Booz Allen Hamilton and Ernst & Young, the Korea Energy
Economics Institute (KEEI), Sandia National Laboratory (SNL), the California Department of
Finance, the University of Michigan and the Massachusetts Institute of Technology (MIT),
and the Tennessee Valley Authority (TVA).
The REMI model incorporates four major modeling methodologies including input-output
modeling, computable general equilibrium modeling, New Economic Geography, and
econometrics. Its structure accounts for both the costs and benefits of any policy options,
and it provides detailed, multi-regional, and multi-year results on the economic and
demographic impact of decisions including the implications for job creation, gross domestic
product (GDP), personal income, and population.
This study used data from the Energy Information Administration (EIA) and the ReEDS
model, developed by the National Renewable Energy Laboratory (NREL) and ran here
by Synapse Energy Economics, to show the net effect of a national-level fee-and-dividend
carbon tax when accounting for the downside of higher energy costs and reduced energy
production versus the benefits of additional household income and spending, improved air
quality, and investment in alternative power generation types.
Other major REMI studies in the energy arena include state-level carbon tax analyses
for Massachusetts, Washington, and California. Other studies include the impact of Medicaid
expansion in 25 states and the state-by-state impact of federal immigration reform options;
those results were a feature of the Wall Street Journal late last year. General studies using
REMI include economic development, energy, transportation, education, tourism, taxation,
and other topics.
CONTACT: [email protected], 404-769-7461