Several prominent economists, businessmen and government figures, many of whom have served under Republican presidents, say taxing carbon emissions and putting the dividends back in the pockets of Americans would be an effective way to combat climate change and support disaffected citizens, while adhering to conservative principles of free market economics and limited government.
The report, "The Conservative Case for Carbon Dividends," was published online Wednesday by the Climate Leadership Council.
The paper acknowledged that the evidence for climate change is "mounting" and that while "the extent to which climate change is due to man-made causes can be questioned, the risks associated with future warming are too big and should be hedged."
At the very least, the authors say, "we need an insurance policy."
The team also said the populist allure of politicians such as President Donald Trump suggests a frustration and disaffection among many Americans who feel left behind by economic disruption and change.
Taxing carbon and returning the money to ordinary citizens provides an unusual opportunity to provide relief for struggling Americans while hedging against the potential effects of climate change.
The team behind the paper includes several men who have served in key roles in Republican administrations: former Secretary of the Treasury under George W. Bush (and one-time Goldman Sachs chairman and CEO) Henry M. Paulson Jr., and James A. Baker III, who served as secretary of State under George H.W. Bush, Treasury secretary under Ronald Reagan and chief of staff for both administrations.
Harvard economics professor Martin Feldstein, also in the group, served as chairman of the President Ronald Reagan's Council of Economic Advisers, and George P. Shultz served as Reagan's secretary of State and secretary of the Treasury and Labor under Richard Nixon, while Harvard economist N. Gregory Mankiw served as chairman of George W. Bush's President's Council of Economic Advisers.
Other contributors include former Wal-Mart Chairman Rob Walton, venture capitalist Thomas Stephenson of Sequoia Capital (who served as Ambassador to Portugal under George W. Bush), and Climate Leadership Council founder, president and CEO Ted Halstead.
The authors say economists "are nearly unanimous in their belief that a carbon tax is the most efficient and effective way to reduce carbon emissions," as opposed to caps on emissions or other regulations.
Their plan has four pieces or stages. First, it calls for creating a gradually increasing carbon tax, that would be assessed at refineries, or at the place where fossil fuels enter the U.S. economy, such as wells, mines or ports. For example, a tax could start at $40 a ton, and then steadily increase over time.
Second, the plan calls for returning that money to the American people as dividends, either through direct deposit, retirement plan contributions, or other means. A family of four could receive $2,000 in dividends in the first year of such a plan, and that would grow over time.
The third step is establishing "border carbon adjustments that protect American competitiveness," by assessing taxes on imports from countries that don't have similar carbon tax plans. Exports sent to those same countries would be given rebates for the carbon taxes already paid in the U.S.
Then, after the first three pieces are in place, the policymakers could begin rolling back other government regulations meant to prevent carbon pollution. That would include repealing the Clean Power Plan and removing the Environmental Protection Agency's carbon regulation responsibility, since such things would, in theory, be no longer necessary.
The authors say such a program would help reduce the country's carbon footprint, while also providing support to many economically disaffected Americans. They cite an estimate from the Department of the Treasury, saying the bottom 70 percent of Americans, in terms of wealth, would "come out ahead under such a program."
"Carbon dividends would increase the disposable income of the majority of Americans while disproportionately helping those struggling to make ends meet. Yet these dividends are not giveaways; they would be earned based on the good behavior of minimizing our carbon footprints."
The notion of a carbon tax has proven unpopular among many Republican politicians, and some have expressed skepticism that climate change is occurring, or that it is influenced by human activity. For example, the Republican party platform during the last presidential campaign explicitly opposed any kind of carbon tax.
But many polls have shown that climate change and carbon pollution are a concern to a majority of Americans, and that even a clear majority of Republicans acknowledge climate change is occurring.
Polls conducted by the Yale Program on Climate Change Communication and George Mason University's Center for Climate Change Communication have found, for instance, that nearly half of all Republicans would support a carbon tax if other taxes were reduced to compensate.
Thus the current report's writers say a carbon tax would reduce the potential for the potentially disastrous consequences of climate change, and offer Republicans a chance to repeal other current laws that might be even more burdensome than a carbon tax, reduce entanglements with oil-producing countries, and appeal to the concerns of a wide variety of Americans, including voters who are younger, or among the fast-growing groups of Latino and Asian Americans.
They say the "plan could strengthen our economy, benefit working-class Americans, reduce regulations, protect our natural heritage and consolidate a new era of Republican leadership. These benefits accrue regardless of one's views on climate science."