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Carbon dividend gives optimism on climate front

WASHINGTON – On global climate change, I’ve changed my mind – just slightly.

I’ve written about this issue for more than two decades and my theme has been monotonously consistent. As a starting point, I’ve accepted the prevailing scientific view that man-made greenhouse gases contribute to global warming.

But I’ve been routinely pessimistic and skeptical that we can do much about it. That is, we can’t easily control the forces that worsen global warming.

We have yet to discover or create some low-cost fuel that would replace fossil fuels – oil, natural gas and coal – which provide roughly 80 percent of the world’s energy. Most nations aren’t willing to scrap the energy status quo – the very basis of modern civilization – before having a practical substitute.

Thus, despite the enthusiasm for non-fossil fuels – wind, solar, hydro, nuclear – global greenhouse-gas emissions are higher today than, say, in 1990.

This raises the atmospheric concentration levels of those gases, which in turn trap heat above the Earth’s surface. From 1990 to 2018, the concentration level of carbon dioxide rose from 354 parts per million to 409 parts per million.

The emissions continue. Poorer countries – China, India, Indonesia and the like – where most energy growth now occurs, won’t condemn their populations to perpetual poverty to satisfy hard-to-attain environmental goals. Many governments, rich and poor, resist inflicting pain on today’s voters, in the form of higher energy prices or more regulations, for imprecise future gains. Politics is present-oriented.

Implicitly, I’ve been critical of much media coverage, which has portrayed the climate-change story as a struggle between good guys and bad – climate-change believers versus deniers. The real story is our relative helplessness.

Still, we should do something. We need to learn how much, if at all, we can influence emissions.

Last week, a large group of economists, including 27 Nobel Prize winners, 15 former chairs of the White House Council of Economic Advisers and two former Treasury secretaries – Democrats and Republicans – issued a manifesto endorsing what’s been called a “carbon dividends” plan. This would be a good start.

Here’s how it would work. The government would tax CO2 emissions. The idea is to prompt Americans to use less fossil fuels, and to prod businesses to focus on renewables and energy efficiency. That’s a standard carbon tax. What defines the “carbon dividend” plan is that all the money collected would be rebated to households.

Under one proposal, the government would slap a $43 tax on each ton of CO2. That would equal about 38 cents on a gallon of gasoline, says economist Marc Hafstead of Resources for the Future, who studied the plan. It would raise about $180 billion in the tax’s first year, he says. If the “dividend” – the tax rebate – were distributed evenly, that would be about $1,400 per household.

Meanwhile, if the tax were increased 3 percent annually, there would be, according to the estimates, a dramatic reduction in U.S. fossil fuel use and greenhouse gases. Without the tax, projected CO2 emissions would be 5.4 billion metric tons in 2035. With the tax, the total would be 3.6 billion metric tons, a 33 percent decline. Still, this would hardly eliminate greenhouse gas emissions.

Assuming the tax works this way, the lesson would be that we can, up to some point, curb emissions without hugely disrupting the economy. As Hafstead notes, the initial increase in gasoline prices of 38 cents a gallon is within normal market fluctuations. The rebate would sweeten the tax. Consumers who cut fossil fuel use would come out ahead.

The tax has another advantage. It decentralizes decision-making to individual companies and people. The alternative of regulations would centralize more power in Washington. This would be complicated, costly and potentially corrupting.

Given President Trump’s hostility toward anything “climate change,” it’s unlikely that major legislation will pass this Congress. We will have to wait until at least 2021.

None of this has changed my long-standing skepticism that, without some major technological breakthrough – safer nuclear power? – it will be exceedingly hard to halt the increase in atmospheric concentrations of greenhouse gases. The required changes in lifestyles and economic activity are simply too great.

But something less grandiose than “solving” the problem is plausible. It may be possible to slow the increase in greenhouse gases.

We need first-hand experience with these problems rather than repeating an increasingly futile and familiar debate. For the record: I have long favored a carbon tax without a dividend. Revenues would go to cut budget deficits. But I recognize the dividends’ political appeal.

All in all, my thinking on global warming has shifted slightly, as I said. I haven’t gotten more optimistic. But I am less pessimistic.