Does America Need a Carbon Tax?

At the United Nations Climate Summit last month, President Barack Obama discussed the need to “double down” on efforts to reduce pollution and mitigate the affects of climate change. He referenced natural disasters and climate crises seen across America, including the drought in California that has crippled farmers, stunted crops, and led to massive wildfires.

He discussed the steps America has taken in the global fight to reduce pollution, everything from sustainable infrastructure and efficiency, to reducing emission allowances for factories and businesses, to renewable energy efforts. Changing technology and improving the way we utilize energy have been effective in cutting back on pollution, but they aren’t the only weapon in the international arsenal. Carbon taxes have long been another method used nations to help cut back on emission rates, but they aren’t without their controversy, and it’s uncertain whether the United States government would be able to get them passed.

How do carbon taxes work?

Carbon taxes are simply a tax applied to a business’ energy expenditures aimed at reducing the use of carbon emitting energy sources. These contribute to global warming by adding to greenhouse gases. Such taxes are an added economic cost for environmental damage and are meant to help dissuade the use of more emission-heavy energy sources. Related are cap-and-trade policies like the ones the European Union has in place, which place a ceiling on emission rates while allowing for the exchange of carbon allowances between companies.

So if one business is better able to adapt to the reduced emission cap, it gains an advantage over competitors and can trade whatever emissions it does not utilize. It adds incentive for companies to go green. Carbon taxes have this same incentive, but in a more straightforward way where what amounts to a fine is given to companies that have high environmental impact. Both fall within the category of carbon pricing and are considered important steps by many NGOs toward reducing pollution.

What are the downsides to the emissions tax?

Carbon taxes have the obvious intended benefit of helping to reduce emissions and slow global climate change. But many argue that they could also hurt the economy and drive away business while failing to properly utilize revenue. The money that is made from taxing carbon can be reintroduced into the economy in ways that alleviate the negative economic impact of the tax, or finding the right way to implement this and prevent a negative business environment could be tricky.

It’s possible growth could be adversely affected for certain companies and industries that currently rely the most on dirtier energy sources, and this could in turn have negative affects on job creation and employment opportunities in key areas. Conversely, it’s possible growth in other areas will be sparked by the need for innovation and infrastructure changes, which in turn could create new jobs. President Obama argued during the UN summit that there “does not have to be a conflict between a sound environment and strong economic growth,” and this could be applied to a carbon tax as well. However, the possibility that a conflict might arise if the tax is not properly put into place is a risk some in Congress are unlikely to accept, especially given their refusal to pass cap-and-trade legislation in the past.

How does carbon pollution affect health?

Harvard University recently published the second part to its three-part health study on health affects of pollution, “Health Co-Benefits of Carbon Pollution Standards for Existing Power Plants.” This study is of particular importance considering recent work from the Obama Administration and the Environmental Protection Agency in proposing emission standards for America’s power plants.

According to a White House fact sheet on the issue, these plants produce one-third of America’s total carbon pollution. Back in June, the EPA suggested an emissions reduction for coal plants by 30 percent between 2005 and 2030. While not directly related to a carbon tax, the research being done as a result still applies. Reduced carbon pollution — whether it’s a result of taxing or EPA standards — has the same potential for health benefits.

The Harvard School of Public Health and Center for Health and the Global Environment examined three different carbon cutting scenarios and found the one closest to the EPA’s proposal to be the best in terms of lives saved and health improvements. It estimated that an annual 3,500 premature deaths would be prevented, 1,000 less hospital admissions would take place, and 220 fewer heart attacks — not to mention reducing asthma symptoms and improving air quality for children, the elderly, and other individuals at increased risk.

How does American pollution and policy measure up?

“Over the past eight years, the United States has reduced our total carbon pollution by more than any other nation on earth,” said President Obama to the UN. This is less impressive when one considers that America has the second largest emissions output in the entire world, behind China. On top of that, the U.S. is one of the few nations that has yet to put a price on carbon, something The New York Times reports 40 other nations have already done in one way or another. While Obama tried and failed to push cap-and-trade through Congress, he did succeed in requiring states to put their own emission-cutting plans into place with an executive order. Ten U.S. states have their own cap-and-trade laws put in place and seven states have signed onto a World Bank declaration asking nations to place a price on carbon.

[The] most powerful move a government can make in the fight against climate change is to put a price on carbon,” tweeted the World Bank. The Bank’s declaration still remains unsigned by the United States in its entirety though, largely because conservatives — especially those from coal industry states — dislike the idea of a carbon tax because of the effect they believe it will have on their economy.

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