Commentary: There are market-based solutions to climate change

Happy Earth Day! As we celebrate our tenuous relationship with the only habitable planet we know of, the White House is celebrating in a different way: by gutting the Clean Power Plan, ending the moratorium on coal leases on public land, stopping the Environmental Protection Agency from calculating the social cost of carbon when developing new rules and rolling back regulations limiting the venting of methane emissions from oil and gas wells.

As an economics professor with a previous career in international business, I sympathize with conservatives’ distaste for top-down regulations. They are often clumsy and unnecessarily costly. But while we can eliminate the regulations, we cannot repeal climate change. We are already seeing the consequences – rising seas, record hot temperatures, bleaching coral reefs, more severe weather, droughts and the migration of tropical diseases – and things will surely get worse.

Fortunately, we do have market-friendly solutions that can stimulate growth and drive new, high-paying jobs. The best approach, and one favored by a growing number of even conservative economists and business people, is called a fee and dividend. The policy would assess a fee on the carbon dioxide content of fossil fuels at or near the first point sale. The fee would start low but increase steadily, sending a powerful signal to the marketplace that moves investments and behavior toward clean energy and efficiency.

At the same time, revenue from the fee would be returned equally to all households, shielding families from the economic impact of the carbon fee, with a majority of households actually coming out ahead. In order to maintain a level playing field for American businesses, a border adjustment tariff would be applied to imports from nations that lack an equivalent price on carbon.

A study released in 2014 by Regional Economic Models Inc. examined this approach to determine its environmental and economic impact over a 20-year period. The REMI study found that after 20 years, the policy would cut CO2 emissions by half. And in a finding that shatters the myth that carbon pricing would destroy the economy, the study showed it would create jobs, primarily because of increased spending in labor-intensive industries as a result of the dividend.

In a hopeful sign, Republicans are increasingly coming to terms with the reality of climate change. In the House, a group of 18 Republicans and an equal number of Democrats have formed the Climate Solutions Caucus to identify bipartisan approaches to the issue.

Separately, 17 Republicans in the House, led by Elise Stefanik (N.Y.), Ryan Costello (Pa.) and Carlos Curbelo (Fla.), introduced a resolution last month calling on the House to commit to … “working constructively, using our tradition of American ingenuity, innovation, and exceptionalism, to create and support economically viable, and broadly supported private and public solutions to study and address the causes and effects of measured changes to our global and regional climates ...”

While the GOP realists have not yet formally backed a revenue-neutral carbon fee, with enough support in their districts from constituents, community leaders and local media, Republicans could be persuaded to sign on.

This Earth Day, as we take stock of the state of our world and the steps needed to preserve a hospitable climate, Americans should be alarmed by the callous disregard the current administration has toward the threat of global warming. Fortunately, we have another branch of government that can correct President Trump’s misguided policies. By enacting a fee on carbon with revenue returned to households, Congress can avert disaster, create jobs and reassert U.S. leadership on the greatest challenge humanity has ever faced.

Newport Beach resident DANIEL BROTMAN is an adjunct professor of economics at Glendale Community College.