In his Oct. 26 commentary to the Gazette (“We must act now to reduce CO2 emissions”), Jonathan Sharp reminds us that Delaware - the lowest-lying state in the country - has a lot at risk from the effects of climate change. But Professor Sharp also sees that to significantly reduce CO2 emissions, we need both effective new legislation and a change in everyone’s daily behavior, which is not a simple task.
Hard to argue with Professor Sharp.
The 30 years I have spent marketing energy conservation technologies to heavy industries have taught me a very clear lesson: Endorsement of change by business is all about the bottom line. This is also true for the consumers - nobody wants to pay more for something that is perceived to give less.
I am therefore a very big fan of a carbon tax, with the tax proceeds returned to all U.S. residents. I believe it is the simplest tool to achieve rapid and significant reductions in CO2 emissions.
A carbon tax is typically based on the carbon footprint of the products on the market (how much CO2 was emitted during their production or manufacturing). Products with a higher footprint are taxed more; those with a lower footprint are taxed less. Products imported from countries that do not have a similar carbon tax are taxed by the U.S. at the border (a “border adjustment tax”) to protect U.S. manufacturers from unfair competition from abroad.
Of course manufacturers will have to pass the tax on to the consumer. Which is why it is important that the tax proceeds be returned to all U.S. residents, for an overall net-zero for the consumer. We can envision the IRS sending a check every month to all of us.
This scenario has a cascading effect: Products with lower footprint gain market share because they are comparatively cheaper; in turn, manufacturers invest in their plants to produce at a lower footprint.
A few examples:
• Electricity produced from burning coal or natural gas is taxed higher than electricity produced by wind turbines or solar panels. This promotes the construction of wind and solar power plants
• Gasoline is taxed higher than electricity produced by wind and solar power. This encourages consumers to adopt electric cars and trucks
• Beer produced at plants running on wind/solar power has a lower tax rate. This encourages brewers to switch to wind/solar power.
• Same for bread, cereals, milk, etc….
A small part of the carbon tax proceeds should also be set aside for retraining workers affected by the switch to a lower-emission economy. Nobody needs to be left behind. Retooling America should create an economic boom and generate lots of work.
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