Three West Coast governors wrote recently of a regional model for addressing climate change. Each of their three states — California, Oregon and Washington — is taking a different approach to reducing carbon emissions. Oregon’s approach has an opportunity to be the best.
A new study released by Portland State University examines a number of scenarios for pricing carbon emissions, and the results are encouraging. In some scenarios, emissions reductions can be achieved without any negative impact on economic growth and without the need for higher taxes.
Those values are crystal clear: economic growth, no net tax increase and authentic revenue neutrality. These three are prerequisites for Republicans’ support of any carbon tax proposal.
If these goals can be achieved, Republicans will be able to go back to their districts and articulate to their constituents free-market and limited government rationales for their votes.
The free-market case is straightforward. Carbon emissions are a market externality that distorts the true cost of production.
As a result, carbon-neutral alternatives cannot compete because they do not enjoy the same societal subsidy. A carbon tax removes the public subsidy and allows market actors to receive accurate price signals.
The limited government case is no less compelling. By pricing carbon and returning balance to the energy market, there will be no need for wasteful energy subsidies, be they for clean technologies or for fossil fuels. Government will not choose winners and losers. Consumers will. The agency of individuals, not the fiat of bureaucrats, will dictate Oregon’s energy future.
At bottom, internalizing the externality of carbon emissions is utterly consistent with the free-market beliefs that many conservatives and libertarians hold.
For their part, Oregon Democrats would do well to recognize that a policy change as significant as a carbon tax begs for a broad coalition of support. Twisting arms to achieve the bare minimum number of votes would further politicize an issue that will require national acceptance for real carbon mitigation outcomes to be achieved.
It bears repeating that a carbon price in Oregon, or along the Pacific Coast as a whole, is not sufficient to meaningfully affect global emissions.