The Republican Solution for Climate Change

Republicans have the ability to offer a market-based solution to climate change, so why aren’t they doing it?

William F. Buckley, widely considered the father of modern conservatism, once opined: “Conservatives pride themselves on resisting change, which is as it should be. But intelligent deference to tradition and stability can evolve into intellectual sloth and moral fanaticism, as when conservatives simply decline to look up from dogma because the effort to raise their heads and reconsider is too great.” A perfect illustration is the GOP’s current stance on climate change—an issue Buckley himself took seriously.

In the face of overwhelming scientific consensus, today’s Republican leaders either deny climate science outright or insist that any solution, as Marco Rubio recently claimed, “would have a devastating impact on our economy.” This has relegated the GOP to playing defense at the moment that President Obama is turning climate mitigation into a central pillar of his legacy and heading to Paris to broker a global climate agreement. Republicans have backed themselves into a losing climate position that not only reflects poor science, poor economics, and poor strategy, but also betrays enduring conservative principles.

The party of Theodore Roosevelt has forgotten that stewardship stands among its most noble traditions. As Russell Kirk, author of The Conservative Mind, put it: “Nothing is more conservative than conservation.” It was Ronald Reagan, after all, who signed the Montreal Protocol, the most successful international environmental agreement to date. But  today’s Republican leadership views stewardship as incompatible with free enterprise and limited government. This is a shame, as the conservative canon could offer America a better climate solution than Obama’s Clean Power Plan.

So what would a conservative alternative look like? Naturally, it would be market-based. It would begin by fixing a widely known flaw of free markets: their tendency to produce negative externalities—such as pollution—as a result of not being factored into market pricing. The obvious remedy is a carbon tax, which economists of all stripes overwhelmingly favor. Recent advocates include Henry Paulson and Gregory Mankiw, respectively secretary of the treasury and chairman of the council of economic advisers under President George W. Bush.

But what makes for good policy does not necessarily make for good politics. A carbon tax is usually considered a non-starter in the United States, both among the general public, to whom it sounds like all sticks and no carrots, and to the GOP, which views carbon taxes as a backdoor to larger government. This political calculus changes completely, however, if the money generated is returned to citizens in a revenue-neutral fashion. Two-thirds of Americans favor such an approach, according to a Stanford University/RFF poll.

The idea of a revenue-neutral carbon tax is hardly new. My colleagues Clifford Cobb, Jonathan Rowe, and I wrote about this 20 years ago in an Atlantic cover story. What’s new is that in 2008, the right-of center government in British Columbia introduced such a plan, and sufficient time has now passed to weigh the results. Fossil fuel use in British Columbia has since fallen by 16 percent, as compared to a 3 percent increase in the rest of Canada, and its economy has outperformed the rest of the country. So the benefits of this approach are no longer theoretical.

The next question is how revenue generated from carbon taxes should be returned to the American people. The Alaska Permanent Fund, which pays out an annual dividend to all residents, and was first introduced by a Republican governor in a state known for its libertarian tendencies, provides a useful precedent. But unlike the Alaskan model, which derives its revenues from resource extraction and therefore encourages fossil fuel use, a climate dividend funded by a carbon tax would encourage the precise opposite: efficiency and cleaner energy.

All citizens would suddenly have an economic stake in reducing greenhouse gases. There is no free lunch here, but rather a highly incentivized, à la carte, one: The bigger your carbon footprint, the more you pay; the smaller your footprint, the more you benefit as all revenue raised would be distributed equally. So if, for example, you choose to drive a gas-guzzler, your costs will go up, but if you switch to a more efficient car or public transportation, you come out ahead. Each year, both the carbon tax and corresponding dividend would increase, until the country reaches a low carbon economy.

Prominent Republicans such as former Secretary of State George Schultz and former Congressman Bob Inglis are already advocating such a plan—which they call Fee and Dividend—alongside liberals such as climatologist James Hansen. Meanwhile legislatures and citizens in states from Massachusetts to Washington are advancing their own versions of the idea, hinting at its bipartisan appeal. But the strategic upsides to Republicans may be the most intriguing.

Chief among these is a climate solution fully consistent with the philosophy of limited government. The popularity of climate dividends would ensure that a carbon tax remains revenue neutral—but the argument goes deeper. The logic of internalizing the environmental cost of carbon extends to pashing out all fossil fuel subsidies, which would shrink government. And over the longer term, as Paulson points out, “pricing carbon… will reduce the role of government, which, on our present course, increasingly will be called on to help communities and regions affected by climate-related disasters.”

What of the fears that tackling climate change could cripple the economy? As British Columbia illustrates, recycling carbon revenues back into the economy yields the opposite. Bill Gates (another carbon tax advocate), recently told The Atlantic that decarbonizing requires an unprecedented level of innovation. This so happens to be one of the main drivers of economic growth and higher living standards. Reinventing everything from transportation and energy infrastructure to homes and the appliances they contain will not only spur whole new industries, but also create vast numbers of jobs. This year, a REMI study found that pairing carbon taxes with climate dividends could generate 2.1 million new jobs in the United States over the next decade.

Could a climate solution that upholds conservative principles overcome the current lock that fossil fuel and related interests have over the GOP? Judging from the Republican presidential primary, the answer is a resounding no. But more encouraging forces are at work beneath the surface.

Jerry Taylor, president of the Niskanen Center, is lobbying Republicans to propose a carbon tax in exchange for dismantling Obama’s Clean Power Plan. A prominent GOP donor, Jay Faison, is spending $175 million to encourage Republican candidates to take climate change seriously. A number of Fortune 500 companies are voluntarily committing to carbon reductions. And grassroots groups like Young Conservatives For Energy Reform are gaining traction within the party. Add to that the moral weight of Pope Francis’s much-publicized plea to honor our collective responsibility as stewards of the earth.

Perhaps this explains the recent spike in the share of Republicans who acknowledge that climate change is occurring: from 47 percent to 59 percent in the latest University of Texas Austin poll, and from 47 percent to 56 percent in the latest University of Michigan one. Among younger Republicans and political independents —two key swing groups—support is considerably higher. Come the 2016 general elections, these numbers suggest that the Republican presidential nominee may well be cornered in an unpopular position for lack of a conservative climate solution.

How, voters will increasingly ask, can the GOP claim to be the party of the future, without a plan to safeguard it?