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Democrats should embrace a carbon tax

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The Democrats need this William of Ockham-esque adage for their 2020 campaign here in the age of Trump: When you can, keep it simple and easy to understand. At this point, however, they risk getting that backward on two vital issues: climate change and health care.

Today, let’s look at climate.

These days, among Democratic candidates, it’s almost de rigueur to talk about a Green New Deal, a nostrum that wanders from climate concerns into an ethereal outline for guaranteed jobs and more generous wage and benefit packages (including vacation and retirement benefits), with health care assurances thrown in for good measure.


On Monday, presidential hopeful Beto O’Rourke offered his own many-pronged, multitrillion-dollar climate plan. It has four principal parts — executive actions he would take, such as reentering the Paris Agreement; a $1.5 trillion federal program aimed at leveraging another $3.5 trillion in state and private spending; a hard target of zero net emissions by 2050; and extreme-weather-resilience measures — each of which has a half-dozen or more subsets. That said, his plan certainly qualifies as more streamlined and practical than lefty luminary Alexandria Ocasio-Cortez’s all-encompassing “Green Dream,” as Nancy Pelosi puckishly styles it. And yet, it still feels as though Democrats are losing sight of the greenest, tallest tree for the broader public-policy forest.

That is, a rebatable carbon tax, based on the carbon content of energy sources. Such a levy would raise the price of fossil fuels to reflect their climate-change effects. There’s widespread agreement among economists that this simple solution would be a highly effective tool for reducing carbon emissions.

“Currently, the cost of electricity generation that causes a large carbon impact on the atmosphere is lower than the real cost to society,” says economist and Nobel laureate Peter Diamond. “That’s a subsidy that gets in the way of economic efficiency just as if the government said, ‘Let’s subsidize coal power and not do something comparable for solar.’ ”


The same dynamic is true for other carbon-based energy sources as well. By making the price of those fuels include the cost of the damage they cause, a carbon tax would incentivize a shift toward benign energy sources like solar or wind.

Now, the two approaches aren’t mutually exclusive. And as Diamond notes, a carbon tax isn’t, in and of itself, the complete answer on climate change. And yet, given the consensus among economists about the efficacy of a carbon tax, the fact that it’s not explicitly included in the various Democratic plans is noteworthy.

Part of the reason is a skittishness about any taxes that fall on anyone other than the wealthy. One can almost hear the concerns: A carbon tax lost (again) at the ballot in Washington state last November, and a fuel tax triggered a huge backlash in France. The first is true, though on the second, you have to factor in French President Emmanuel Macron’s ham-handedness in first cutting specific taxes on the wealthy and then, later, imposing the broad gas-and-diesel tax.

But that concern largely disappears if the revenue raised by such a tax is rebated to consumers. That way, the price of carbon-intense fuel rises and the proper price signal is sent, but the consumer doesn’t suffer much from the cost increase. Indeed, if the rebates are awarded based on average energy use, it would prove a net plus for those who consume less fossil fuel. And a carbon tax obviously could be combined with other financial incentives to make the switch to greener energy even more attractive.


It would take some explaining to overcome initial skepticism. But the same is true with the Green New Deal. And a carbon tax is an idea certified by economists of many different stripes as a policy that would yield impressive results in reducing carbon emissions. Yes, it would require some salesmanship, but climate change is a coming crisis, one that requires quick, effective action. A carbon tax meets those tests. Given that, it’s something Democrats should have the courage to embrace — and take the time to explain.

Scot Lehigh can be reached at lehigh@globe.com. Follow him on Twitter at @GlobeScotLehigh.