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How a Carbon Tax Can Save America

Thursday - 2/14/2013, 5:35am  ET

In last night's State of the Union address, President Obama laid out his vision for a vibrant America, one with jobs as bountiful as clean energy and a society that relies less on fearmongering and more on rational thinking. While creating jobs remains a top priority for the White House, there are plenty of hurdles that remain to garnering enough votes from both parties.

What if the political gridlock in Washington could end with both major parties emerging victorious while simultaneously reducing the deficit? What if the solution could also reduce the country's emissions in 2050 to levels last seen in 1984? It may sound too good to be true, but such a solution may not be as far-fetched as it sounds. According to the Congressional Budget Office, a national carbon tax of $20 per metric ton of carbon dioxide equivalent emissions that increases at a nominal rate of 5.8% per year would raise $1.25 trillion over a 10-year period. Revenue from such a tax could be used to offset cuts to individual income taxes or corporate taxes, extend social programs, be placed into a fund for renewable-energy projects, or a combination of these options and more.   

Yes, it may sound counterintuitive, but a tax can ultimately lead to prosperity. And while the tax itself is simple, explaining the reasons for and distinguishing the misinformation about it are a bit more difficult. Take these words as an evolving blueprint for how an American carbon tax could combat climate change and reduce the deficit all the while protecting our core values -- and our planet -- for future generations.

If a carbon tax is so awesome, then why doesn't it exist?
It doesn't help that the phrase "carbon tax" contains the dreaded word "tax." I once had a history teacher who told me the first things politicians do after being elected to office is prepare for re-election. That may have some truth to it when you consider that the political landscape is dominated by career politicians on both sides of the aisle. An ominous focus on remaining in office forces politicians to steer clear of risky measures, which can stifle real societal progress from being made.

Today it seems that the winner of each election gets handed a shiny new can labeled "Urgent: America's Problems" that is then happily kicked down the road. In a politician's eyes, that can might as well read "Open Now for Political Suicide."

This problem was front and center with the latest round of debt-ceiling talks, which lately have come down to a game of tug-of-war, with the slider bar between taxes and social programs. Each side tries to maximize its chips -- and political future -- while simultaneously minimizing that of the opposition. Not surprisingly, little was accomplished.

That hasn't stopped several countries and individual states from employing emissions programs of their own. To be fair, a carbon tax is not the only way to regulate emissions. The European Union, Australia, South Africa, and others have varying degrees of carbon policies in place. So, too, do Quebec, California, and a host of New England states. According to National Journal, carbon trading markets from California, Australia, and Quebec may be linked in the not-too-distant future to "create a truly global market" generating "billions of dollars."

In fact, Australia's carbon policies and technological advancements have resulted in wind energy that is cheaper than coal. That is no small step for the world's fourth largest coal producer and should erase doubts for countries currently on the fence over carbon legislation.

A global carbon market will be the ultimate step toward staving off atmospheric-related climate change. This is a global problem that requires global solutions. Last year, America's new-found love for natural gas displaced coal and saw carbon emissions plummet to levels last seen in 1992. It is certainly good news, but it should be considered only part of a long-term solution for controlling emissions. The coal we neglected to burn within our borders stoked power plants elsewhere on the globe. Earth doesn't care where emissions enter the atmosphere.

A simpler way to connect emissions and climate change
I know there are those who say the climate change we're seeing is a natural cycle. While I fully expect plenty of discussion in the comments section below, I think one graph shows just how much of an impact humans have had on the atmosphere. Before we get to that, let's discuss a simpler way to account for emissions: a mass balance.

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