EXXONMOBIL is among a number of industry giants that have backed plans for a US carbon tax designed by a group of Republican elders to build support for bipartisan climate action in the US.
The plan, put forward by the Climate Leadership Council, proposes using a gradually-rising carbon tax, starting at US$40/t, that would be levied against industry but would be revenue-neutral so that 100% of the income is paid back to the public.
The proposal aims to convince Republicans, who have proved more sceptical than Democrats of the needs to address climate change, that there is a way forward that “embodies conservative principles of free markets and limited government”.
The Council argues that climate progress is deadlocked because it is inherently difficult to persuade individuals to incur short-term costs now for environmental benefits that will occur to others in 30 years. Rewarding the public today for their greener behaviour could change that, with the scheme estimated to pay a family of four a US$2,000 dividend in its first year.
Industry has come out in support of the scheme, which includes a rollback of the carbon regulations brought in by the Obama administration. Supporters include BP, GM, Johnson & Johnson, P&G, Pepsico, Shell, Total and Unilever.
If it could achieve bipartisan support and pass into law, the measures would add confidence to industry that it could invest without fears that climate regulations would change each time the White House passes between a Republican and Democratic president. Since coming to power in January, President Donald Trump has pledged to scrap Obama’s Clean Power Plan and remove the US from the Paris Climate Agreement.
To protect US industry and increase the dividends to citizens, the measures include so-called border carbon adjustments that would levy fees against imports from countries without carbon taxes.
“A carbon dividends plan can assist in three important ways. First, a gradually-increasing carbon tax would send a powerful market signal that encourages technological innovation and large-scale substitution of existing energy and transportation infrastructures. Second, rising fossil fuel costs would offer companies the predictability they lack in today’s energy market, encouraging longer-term investment. Third, dividends would have an important stimulatory effect by putting cash in the hands of the end consumers most likely to spend it,” the Council writes.
The plan has been created by James Baker III, who served as secretary of state under George HW Bush and chaired the independent investigation into BP’s 2005 Texas City refinery explosion; and George Schultz, who served as secretary of state under Ronald Reagan. It is supported by individuals including renowned physicist Stephen Hawking and environmental groups including Conservation International.
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