When policy experts debate climate change solutions, they often talk about “a price on carbon.” They are arguing about whether companies should pay when they put carbon pollution in the air. Proponents say that it’s simple economics – if it’s free to pollute, you’ll get a lot of pollution. Opponents claim it will raise the cost of energy that’s produced from high carbon sources, like coal.
But here’s the secret that most people seem to be missing: There already is a price on carbon, and it’s paid by the taxpayers.
Carbon pollution, like every other form of pollution, has an impact on the environment. Dump toxic waste in a river, the fish will die and the people who drink the water will get sick. Put soot in the air and you’ll get more kids and older people having asthma attacks. And when you produce carbon pollution, you get climate change – sea level rise, stronger storms, severe droughts, damage to agriculture, and more.
All of those impacts cost money. Insurance rates go up when storms get more destructive. Taxes increase when cities have to rebuild bridges and roads. Military budgets go up when droughts and population shifts cause conflict. Not to mention impacts on agriculture and health care costs.
In other words, the price on carbon is what we all pay when there is no market force to limit the pollution that causes climate change. So the debate is really about who will pay that price – the companies who are making a profit from the fossil fuels, or the taxpayers who pick up the tab now?
When something is “free”, we end up paying the cost somewhere else in the system.
Right now, we have private profit and public cost. It’s just like if we allowed every business to throw its garbage in the street because it’s too expensive to have it hauled away properly. Does it add a little bit to your dinner check to require that restaurants dispose of their trash properly? Sure. But it would be more expensive for you if the city had to clean the streets of their garbage every day. So just like we put a “price on garbage” we need a “price on carbon pollution.” When something is “free”, we end up paying the cost somewhere else in the system.
Now, a “price on carbon pollution” can mean a lot of things. You could tax companies based on the amount of carbon pollution they produce, and return the money to taxpayers. You could put a limit on how much they can emit, thereby requiring them to invest in ways to conduct business in a less polluting way. And there are other approaches, too. The bottom line is that polluting is no longer free to them, which will make them pollute less, and lower our costs in dealing with the consequences.
So, by all means, let’s have a debate about a “price on carbon”. But don’t be fooled by anyone who says the question is whether to have one or not. It’s only a question of who pays.