U.S. carbon tax talk on the rebound: enough for both parties to dislike . . . and pass?
It might only apply to industry emissions and nary a Republican would dare admit to seriously considering it, but talk of a possible carbon tax is making the rounds in political Washington and elsewhere.
Think about it. A carbon tax does not lack for support among mainstream energy and fiscal policy experts; it has drawn support from several corporate CEOs; and it could score huge points — even a few ‘green’ ones — for those trying to make a dent in the ever-expanding U.S. annual budget deficit and the nation’s overall debt.
Consider too that the soon-to-be lame duck Congress will have a strong incentive to take some action to avert the automatic, draconian domestic and defense budget cuts due January 3, 2013 if it cannot strike a compromise.
So what got policy analysts talking tax all of a sudden? Many ‘weather vanes’ point to the launch of the Energy and Enterprise Initiative (EandEI) July 10, 2012 by former GOP Congressman Bob Inglis of South Carolina.
Two days after EandEI launched, the American Enterprise Institute hosted a private gathering. The agenda listed representatives of groups such as Public Citizen, Taxpayers for Common Sense, the Union of Concerned Scientists, the Brookings Institution and Resources for the Future.
Now consider who and what the Energy and Enterprise is Initiative is pursuing:
Inglis said he wants conservatives “to step forward to the competition of ideas rather than shrinking back to science denial” about climate change.
“We’ve got some firmly-held ideologies that are trying to hold back … facts and science’s distillation of those facts. History doesn’t treat well people who don’t build an ideology on facts; Joe McCarthy comes to mind for example,” Inglis said.
Enter a tax on carbon emissions, and maybe not just emissions from industrial facilities such as power and manufacturing plants.
“Any mechanism of taxing negative externalities will help get the economics right,” Inglis said. “Right now the incumbent fossil fuels are not accountable for their hidden costs.
“If we were to attach those costs to the product, then the marketplace could judge that product vis a vis other competing challenger fuels. In some cases, the challenger fuels would win.
“We’ve been using clumsy government mandates, fickle incentives and the result is, you don’t get the muscular free enterprise response delivering real solutions,” said Inglis.
“I’m looking for a price signal that causes the free enterprise system to work,” he added.
Inglis said when wind industry professionals hear him talking about eliminating all subsidies permanently, including the Production Tax Credit due to expire at year’s end, “they start gasping for air.” But “they start breathing again” when a tax would apply to all fuels.
Inglis’ philosophy is framed in part by how Citigroup economist Carlos Gutierrez defines sustainability:
“Sustainability means making a profit. If you can make a profit, it’s sustainable. If you can’t, it’s not.”