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Green Republicans Should Support a Carbon Tax: Editorial Board


These translations are done via Google Translate

By The Editors

(Bloomberg Opinion) Rather unexpectedly, Republicans have become a minor font of ideas on fighting climate change. There’s been talk of clean-energy tax credits, a boost to carbon-capture technology, a renewed push for nuclear power, even a new “Roosevelt Conservation Caucus” dedicated to green issues. Above all, they say, the fight against climate change must take advantage of American innovation.That’s no doubt true. And Republicans are to be commended for finally grappling with this problem. Unfortunately, most of the ideas they’ve aired so far are unlikely to achieve their stated goals.

One plan reportedly under consideration would create a government fund to invest in clean-energy companies. That sounds helpful but is in fact a recipe for failure. Politicians have no aptitude for identifying workable or cost-competitive ideas, and their incentives — such as maximizing jobs — are at odds with the market’s. In all likelihood, such a fund would crowd out private investment, prop up unpromising companies at taxpayer expense, and thereby actually reduce the urgency to come up with viable solutions. Surely Republicans remember a solar-panel company called Solyndra?

Another plan involves pumping lots of money into carbon-capture research and development. Much depends on the details, but again, the right way to support an experimental technology isn’t to lard businesses in politically expedient districts with loan guarantees and other blandishments. Instead, Congress should fund research programs at labs and universities. That would help avoid cronyism, build a skilled workforce, and spread the benefits of technological progress more widely.

But with a few laudable exceptions, Republicans are ignoring the best approach of all — one that would accord with the party’s views on market economics and do more to encourage innovation than anything else. They should get behind a carbon tax.

By raising costs on companies that emit carbon dioxide, such a tax would encourage them to find inventive ways to cut down on fossil fuels while allowing green technologies to compete on a fair footing. A tax set to rise gradually over time would spur long-term investment in clean-energy infrastructure and the development of cleaner products and businesses.

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If made revenue-neutral, moreover, such a plan wouldn’t amount to a tax increase and wouldn’t enlarge the state: It could be paired with equally large cuts in other taxes, which could be designed to more than offset increased energy costs for ordinary taxpayers. By making the tax code more efficient, this approach would also boost economic growth.

Granted, one complication does arise: To protect American competitiveness, so-called border adjustments would be needed. Imports of carbon-intensive goods from more permissive countries would need to face added charges, while U.S. exports to such areas would qualify for rebates. This would level the playing field while also rewarding innovation and offering an incentive for other countries to follow America’s lead.

Many Republicans are inclined to despise any new tax, even if it allows others to be cut while serving a vital public purpose, and some activist groups have reacted to this idea with alarm. But one recent survey found that a solid majority of the party’s voters — and fully 75% of those under 40 — would support such a plan. It’s the rare issue where prudence and public opinion are starting to align.

Republicans should be welcomed to this battle of ideas. Their instinct to focus on technology and market-driven incentives is well placed. All the more reason for them to back a reform that could truly unleash American inventiveness.



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