What would a vaccine for the climate crisis look like?

Over the past year, many commentary writers have pointed out similarities between the coronavirus pandemic and the climate crisis. They’ve reminded us that, in both cases, we were warned by experts. Many government leaders denied the existence of both problems, and some of the general public were drawn into dismissing the experts. Both threats have no regard for national borders, with the most vulnerable people everywhere being at highest risk.

Okay, fine, but what can that tell us about finding solutions? Well, here’s another important similarity: individual, voluntary actions by citizens aren’t enough. It takes policy actions by the federal government.

Small, individual actions we can take to help fight climate change include replacing light bulbs with LEDs, reducing our meat consumption, and driving less. In a way it’s the same with social distancing and wearing a mask to fight Covid-19 – individual efforts can help slow down the rate of increase (of Covid-19 cases, or of greenhouse gases), but by themselves they aren’t enough to bring an end to either crisis.

For the pandemic, the real solution, of course, is widespread vaccination. And although the vaccines are manufactured by private companies, ensuring their rapid development and distribution are things only the federal government can do.

So, what can the federal government do that would finally start to bring down the levels of heat-trapping gases in the atmosphere? What federal policy would overhaul our entire energy system, enabling many different solutions to suit different regional and local economies? Is such a thing even possible?

Regulations or mandates are not the answer. Environmental regulations are effective against certain kinds of pollution, but to control CO2, the leading trapper of excess heat in our atmosphere and oceans, traditional regulation is not a good tool. CO2 has such a huge variety of sources, from the largest coal-fired power plant to your neighbor’s leaf blower, that controlling them would require regulations for thousands of devices and processes, each involving public comment and court challenges.

Allowing unlimited carbon pollution, at no cost to polluters, represents what economists call a “market failure” of enormous proportions. So instead of regulation, economists say that the best first step to limiting further damage from global warming is a carbon fee and dividend plan. Here’s how it works:
• A carbon fee is placed on coal, oil, or natural gas as it enters the U.S. economy.
• The fee starts at, say, $15 per metric ton of CO2 and increases by $10 – adjusted for inflation – every year until CO2 emissions are reduced by 90 percent. If emission cuts don’t meet mandatory targets, the annual increase can be raised.
• All of the money is returned to American residents in equal monthly carbon dividends, helping consumers adapt while businesses compete to reduce their carbon footprints.
• A carbon border fee adjustment is placed on emissions-intensive goods that are imported or exported. This discourages businesses from relocating to where they can pollute more, and also encourages other nations to price carbon.

This steady, predictable increase in fossil energy prices will stimulate invention and investment in myriad ways. Consumers will know they can count on increasing dividends to help them through the transition to a world of clean, energy-efficient goods and services.

You might think that government regulations would get that done faster than putting a price on carbon. But the evidence shows the opposite. Well-designed carbon price legislation is forecast to work very quickly, while regulatory action can be stalled for years by procedural obstacles and court challenges. Moreover, carbon fees are firmly grounded in Congress’s constitutional “power to lay and collect taxes,” making it resistant to efforts to overturn it in the courts.

If you haven’t heard about carbon pricing before now, you’re not alone. But then again, had you ever heard of mRNA vaccines until less than a year ago? Just as coronavirus vaccines were made possible in record time by research extending back over many years, so too have years of planning and analysis gone into our understanding of carbon pricing. The “Economists’ Statement on Carbon Dividends,” signed by 3589 U.S economists and published in The Wall Street Journal in 2019, states, in part, “A carbon tax offers the most cost-effective lever to reduce carbon emissions at the scale and speed that is necessary. By correcting a well-known market failure, a carbon tax will send a powerful price signal that harnesses the invisible hand of the marketplace to steer economic actors towards a low-carbon future.” In 2018, Yale professor William Nordhaus shared the Nobel Prize for economics for his pathbreaking work on carbon pricing. The same year, ALPHA passed a resolution supporting a carbon tax.

Just as with the coronavirus vaccine, carbon-fee-and-dividend is a government-provided opportunity that individuals can decide to take advantage of, if they wish. A carbon fee coupled with a dividend that returns all net revenue to households gives everyone the liberty to change their behavior, or not. Those who do decide to change their behavior (by switching to alternative energy sources and green products) will be rewarded, and everyone has the same incentive and opportunity to do so.

In both the Covid-19 and climate crises, one would hope to have a vaccine deployed well in advance, not when we’re in the thick of the emergency. But unfortunately, that’s not what happened. In both crises, we’re racing to catch up. Legislation to begin carbon pricing, led by the Energy Innovation and Carbon Dividend Act, has already been introduced in Congress and will very likely be taken up soon. Please contact Representative Young and Senators Murkowski and Sullivan, and ask them to think of carbon pricing as our most promising, effective vaccine to begin to end carbon emissions.

— Tim Hinterberger, ALPHA president