How the GOP can answer Obama’s climate challenge

By Mark Reynolds

If you’ve been waiting with great frustration for our government to address climate change, President Obama’s second inaugural speech last week was both stunning and exhilarating.

In his most forceful language to date, the President made it clear he intends to devote much of his energy in his second term to “reduce the threat of climate change, knowing that failure to do so would betray our children and future generations.”

If legislative action is not forthcoming, it appears Obama will reach for every tool at his disposal, using executive authority to circumvent a recalcitrant Congress.

One way or another, America will respond to the threat of climate change. The question is whether that response is through expansion of government regulations or through the power of the marketplace. Republicans, who abhor the former, should embrace the latter with a revenue-neutral tax on carbon.

The President’s newfound initiative is being cheered by much of our nation, which awoke last year to the harsh reality of climate change after a series of events influenced by rising temperatures:

  • Horrific wildfires raged out West, where drought, heat and insects thriving in warmer winters combined to turn forests into kindling.
  • Devastating drought in the Plains and Midwest decimated crops, producing shortages reflected in higher food prices.
  •  Heat waves shattered high-temperature records across the country and led to 2012 being the warmest year ever recorded in the contiguous U.S.
  • Superstorm Sandy slammed into the Northeast last fall and caused tens of billions of dollars in damage, from which residents are still recovering.

Sandy was the loudest of the alarms to go off, and President Obama won’t be hitting  the snooze button this time around.

As quickly as Obama issued his challenge, speculation emerged about the means he’ll use to reduce greenhouse gas emissions heating up the planet. It’s likely that his Feb. 12 State of the Union address will define a course of action. The expectation in nearly every quarter is that he’ll use the Environmental Protection Agency’s authority under the Clean Air Act to ramp up regulations on carbon-dioxide and other greenhouse gases.

Is this what Republicans – the party that eschews government regulation – really want?

Rather than wage a futile battle with Obama over EPA’s authority to regulate greenhouse gases – for which the Supreme Court has already ruled in favor – the GOP could answer the President’s climate challenge with a free-market solution embraced by a number of conservative economists: A revenue-neutral tax on carbon that gives proceeds back to consumers.

Here’s how it works: Place a steadily-rising tax on the CO2 content of coal, oil and gas at the first point of sale. Start at $15 per ton of CO2 and increase the tax $10 a ton each year. As a result, the cost of energy will go up. To prevent the tax from being a drag on the economy, return the revenue to consumers, preferably as direct payments.

This clear and predictable price on carbon, which begins to reflect society’s true cost of carbon-based energy, will motivate investors to shift away from fossil fuels and toward clean sources of energy like wind and solar. The need for government subsidies to prop up renewables will eventually disappear.

The appeal for Republicans here is a solution that does not expand the size and role of government. Instead, it utilizes the power of the free market to solve one of humanity’s greatest problems.

An argument continually made against U.S. efforts to reduce CO2 emissions is that other big emitters, like China and India, will thwart our initiatives to curb greenhouse gases. If, however, a carbon tax is coupled with border adjustments on imports from countries that lack a comparable policy, we accomplish two things:

  1.  Protecting American businesses from unfair competition.
  2.  Providing a strong incentive for other nations to follow the U.S. lead (Why enrich the U.S. Treasury when they can keep carbon tax revenues in their own countries?).

So, Republicans, is it going to be regulations or free market?

This isn’t an issue where one party has to claim victory over the other. If we succeed in saving the world, there will be plenty of credit to go around for everyone.

Mark Reynolds is the executive director of Citizens Climate Lobby.

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