Other Views: A climate 'fix' that's good for the economy

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Tom Sinclair and Dan Slick
Monday, June 9, 2014

The U.S. Environmental Protection Agency recently proposed new rules to reduce greenhouse gas emissions from America's power plants. It was the Obama administration's biggest move yet to slow the onset of global warming.

Opponents objected immediately. A spokesman for Wisconsin Manufacturers & Commerce, the state's largest business lobbying group, said the EPA's action “is likely to inflict dramatic and irreversible harm to our economy if it is allowed to move forward.”

What are we to do?

Scientists warn that failing to counter climate change now raises our risk of future catastrophes. Business as usual, they say, will lead to food shortages and health problems from heat and drought, increased loss of lives and property to severe storms, inundation of coastal cities by rising seas and other woes.

Yet, so far, Congress has refused to act. That leaves the administration with limited tools—in this case, regulation—to do the job.

A new study by Regional Economic Models Inc. (REMI), a nationally respected economic modeling firm, suggests that better tools are available. REMI conducted the study for the Citizens' Climate Lobby, a nonpartisan organization concerned about global warming.

The study, released today (June 9), reveals that a revenue-neutral federal carbon tax would cut greenhouse gas emissions more than the proposed EPA rules while adding 2 million jobs to the national economy in just a decade.

The tax would be applied to the carbon content of fossil fuels. The companies that produce these fuels would pay it. The tax would begin at $10 per ton of carbon and rise annually by that amount until emissions targets are reached. Economists say it would trigger a market shift toward cleaner alternatives.

To protect American businesses from overseas competitors not subject to similar conditions, border tariffs would be applied and credits would be given to U.S. exports.

But how would a carbon tax create jobs? In the REMI study, every dollar of revenue from the tax is turned over to the American people in regular dividend checks.

REMI calculated that, under this scenario, a family of two adults and two children would receive annual dividends of nearly $3,500 after 10 years. For most households, the money would more than offset higher consumer prices resulting from the tax. It would be theirs to spend however they wish.

This would pump an additional $400 billion annually into the national economy by 2025, fueling an increase of 400,000 jobs in the five-state region encompassing Wisconsin, Illinois, Indiana, Michigan and Ohio.

Air-quality improvements in the same five states would be worth $30 billion per year. Cleaner air would cut the number of premature deaths in the region by 28,000 in a decade. Job growth and better environmental conditions would boost the regional population by 600,000 residents.

Congress has the power to enact a carbon tax. Conservatives such as Rep. Paul Ryan, R-Wis., who favor free-market initiatives over bigger government should embrace the idea as the most efficient, most effective remedy for runaway climate change.

Tom Sinclair and Dan Slick are members of the Madison chapter of Citizens' Climate Lobby, citizensclimatelobby.org. Readers can contact Slick at danslick@gmail.com or 608-658-7025.

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