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Here’s the two-part climate-change deal Trump needs to strike with China

Donald Trump
Shannon Stapleton | Reuters
Donald Trump

This article is part of a series on the "Future of politics." The series investigates the "Trump effect" on policy, political parties, future candidates, their campaign style and the overall political environment in 2017 and beyond. See the whole series here.

From what we've seen of the president-elect so far, he seems to like big, bold ideas. Here's one that could change the world.

The U.S. and China are the world's largest economies and, not surprisingly, the biggest producers of polluting greenhouse gases ("carbon"). Thanks largely to agreements reached in recent years between the two, a global deal was reached in Paris in late 2015 to address climate change by dramatically curtailing carbon emissions.

Critics complain that the Paris agreement doesn't go far enough to avert the most serious long-term consequences of climate change, because if all commitments made by nearly 200 nations are achieved, warming will only be held to an average annual temperature increase of about 3 degrees centigrade instead of the generally accepted target of 2 degrees or less.

One reason the world would fall short of its goal is because China committed to "peaking" the growth of its emissions in 2030 and reducing them only thereafter. Many fear we can't wait that long, as more carbon is stored in the atmosphere for decades. Moreover, the president-elect has indicated he might consider abandoning the U.S. commitment under the Paris agreement.

"And as Leonardo DiCaprio and I explained to the president-elect, when we met with him in early December, he can walk away from the Paris agreement, but the vast majority of what the U.S. committed will happen anyway, thanks to state and local renewable energy deployment, energy efficiency programs, regional cap-and-trade programs, and by California’s clean car emissions standards."

So how do we put policies in place that finish the job, while stimulating sustainable economic growth worldwide?

The Trump administration could make a deal with China that pledges to keep the U.S. in the Paris agreement, striving to meet its carbon-reduction goals, in exchange for China committing to peak emissions in 2025.

This first part of the Big Idea would actually be the easiest to achieve. I'll bet China could now easily commit to peaking its pollution five years earlier because, since the original deal was made for peaking in 2030, China has made great strides in energy efficiency, deployment of renewable energy, and replacing the dirtiest coal-fired boilers and power plants with cleaner ones (yes, still coal, but far less polluting than their predecessors).

And as Leonardo DiCaprio and I explained to the president-elect, when we met with him in early December, he can walk away from the Paris agreement, but the vast majority of what the U.S. committed will happen anyway, thanks to state and local renewable energy deployment, energy efficiency programs, regional cap-and-trade programs, and by California's clean car emissions standards (which were essentially federalized into the CAFÉ fuel economy rules that are now delivering more fuel-efficient vehicles to American consumers, something that is obvious good for everyone).

The second part of the Big Idea might be harder to achieve, except for the fact that the president's pick for Secretary of State is Rex Tillerson, currently the CEO of Exxon Mobil. To help the world achieve the goal of limiting warming to 2 degrees centigrade or less, the U.S. and China would agree to implement a price on carbon emissions of at least $25/ton by 2025 and call on the other signatories to the Paris agreement to do likewise. That price, whether implemented with a simple carbon tax or through a market-based cap-and-trade program (such as the systems already in place in parts of the U.S., Canada, Europe, and China) would force polluters to pay to clean up those emissions and/or provide the incentive to avoid polluting in the first place.

But why would a Trump administration and a conservative-dominated Congress with many members who deny climate science or are openly hostile to climate solutions want to engage in 25 by 25? It is worth quoting directly from a speech by Rex Tillerson to answer that question:

"At Exxon Mobil, we share the view that the risks of climate change are serious and warrant thoughtful action. Addressing these risks requires broad-based, practical solutions around the world. Importantly, as a result of the Paris agreement, both developed and developing countries are now working together to mitigate greenhouse gas emissions, while recognizing differing national responsibilities, capacities and circumstances. In our industry, the best hope for the future is to enable and encourage long-term investments in both proven and new technologies, while supporting effective policies. Which is what we are doing. We have long supported a carbon tax as the best policy of those being considered. Replacing the hodge-podge of current, largely ineffective regulations with a revenue-neutral carbon tax would ensure a uniform and predictable cost of carbon across the economy. It would allow market forces to drive solutions. It would maximize transparency, reduce administrative complexity, promote global participation and easily adjust to future developments in our understanding of climate science as well as the policy consequences of these actions."

Although Mr. Tillerson has not specifically called for the carbon tax to be $25/ton, some of his Exxon colleagues have supported that level in various meetings, presumably with his blessing. Critics will say $25 may not be enough, but it's a meaningful down payment on getting polluters to pay for dumping their waste into our shared atmosphere, instead of making the whole world subsidize that unsustainable business model.

So how would President Trump explain this deal to those constituents who agreed with his previous contention that climate change was a hoax perpetrated by the Chinese? First, he could say he had gotten a better deal than President Obama (China agreeing to peak emissions sooner). Second, he could say that regardless of one's views on climate science or policy, the 195 nations that signed the Paris agreement will keep their commitments and will need a lot of American technology to do so. If we walk away from our commitment, those nations will shop somewhere else, resulting in America losing jobs and income that could otherwise help us achieve Mr. Trump's lofty goal of 6% economic growth.

A headline that declares "President Trump and Exxon Mobil Agree to a $25 Carbon Tax by 2025 in Climate Deal with China" may be thought at first to be another wave of fake news. But if we don't embrace big, bold initiatives that simultaneously address the sustainability of our environmental and economic future, the real headlines will be far more unbelievable.


Commentary by Terry Tamminen, Secretary of the California Environmental Protection Agency in the Schwarzenegger administration. He is president of Seventh Generation Advisors, an operating partner at Pegasus Capital Advisors and the CEO of the Leonardo DiCaprio Foundation. He is also the author of "Cracking the Carbon Code: The Key to Sustainable Profits in the New Economy." Follow him on Twitter @terrytamminen.

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