My RealClearMarkets.com take on the so-called Climate Leadership Council and its carbon tax proposal.
Many of America’s corporate and academic elites have united to advocate for a carbon tax.
With all the money and brains behind the self-anointed “Climate Leadership Council” (CLC) you would think it would be able to figure out the math is simple that a carbon tax will have no effect on climate. There are reasons they haven’t.
The CLC is undertaking a media and lobbying blitz to push for a $40-per-ton national carbon tax, escalating by 5% per year. The CLC calls this “the most cost-effective, environmentally ambitious and politically viable climate solution.”
A $40 carbon tax would immediately raise the price of oil by $17, or to about 133% of today’s prices. We’re told not to fret the price increase because the government will remit the tax back to taxpayers as a “carbon dividend.” Most consumers will get back more money via the dividend than they paid in the tax, says the CLC.
Let’s breakdown this hucksterism.
First, a carbon tax is no sort of ‘climate solution.’ Manmade emissions of greenhouse gases in 2019 were 55.3 billion tons of carbon dioxide-equivalents and increasing with no end in sight, according to the United Nations. The U.S. share was 7.2 billion tons 13% and shrinking as the rest of the world increases emissions.
Imagine the U.S. magically went dark and emitted no more carbon dioxide (CO2) or other greenhouse gases evermore. The rest of the world, which shows no signs of emitting less, would still emit at least 48 BILLION tons annually, which is 13 billion tons greater than the Kyoto Protocol’s goal of stabilizing emissions at 35 billion tons.
Even if the U.S. never emitted again, the difference in atmospheric CO2 concentration would be about two percent (2%) by the year 2100. No matter your view of climate science, that slight difference in CO2 would make no discernible difference to global temperature.
So simple math shows a CO2 tax would accomplish nothing. Even if a CO2 tax only cost you a nickel, you’d still be ripped off.
Next, although taxes tend to reduce use of the thing being taxed, this isn’t meaningfully true with oil. During the mid-2000s when oil rose to $140 per barrel, US oil consumption dipped a mere five percent (i.e., 20 million vs. 19 million barrels per day). Under the CLC’s plan, it would take 35 years to get the current price of oil up to that $140 level which barely reduced oil consumption in the first place. Absent sensible alternatives, Americans would likely cling to gasoline even as they were ripped off by the carbon tax.
Now for the really cynical part of the CLC’s carbon tax the ‘dividend.’
The CLC’s plan calls for a family of four to receive a $2,000 annual dividend check from the government in the first year, an amount that would grow as the tax increases. But is anyone paying attention to the math?
In 2019, US energy-related emissions were 5.1 billion tons. At $40 per ton, those emissions would raise $204 billion in taxes. Divide that $204 billion by 330 million Americans and you get a carbon tax costing each American $618 or $2,472 per family of four. But the carbon dividend is only worth $2,000 for a family of four, leaving them to pointlessly pay $472 more in energy costs every year.
The CLC’s device around this is to limit the dividend so that 70 percent of households would receive more in dividends than paid in carbon tax. So the CLC’s tax just amounts to a vote-buying, Marxist income redistribution scheme via climate.
Who exactly is the CLC anyway? It’s comprised of multinational corporate rentseekers and greenwashers, ivory tower economists, has-been politicians and left-wing environment groups.
The carbon tax is not about the climate so much as it is about CLC members’ various economic, political and personal agendas. Here are some of them.
Big Oil members (ExxonMobil, Shell, and BP) want to regain control over the price of oil lost due to the fracking revolution. Nuclear utility Exelon and First Solar hope to advance their interests by making fossil fuels more expensive. Goldman Sachs has investments in all sorts of green technologies. Two members are former Energy secretaries from the Obama ‘war on coal’ years. Former UN climate chief Christina Figueres is a leftist looking to end capitalism, as are the green groups like the World Wildlife Fund and the World Resources Institute.
The last time a such a diverse cabal of powerbrokers united on climate was to push cap-and-trade a different kind of carbon tax during the late 2000s. Cap-and-tax failed. Now the CLC has resurrected it. Meet the new fraud. Same as the old fraud.
Steve Milloy publishes JunkScience.com, served on the Trump EPA transition team and is the author of “Scare Pollution: Why and How to Fix the EPA” (Bench Press, 2016).