This Earth Day, we have a lot to think about.
Climate models forecast a global temperature increase of 6.6 degrees Fahrenheit and a sea level rise of 4 feet by 2100. Recent research revealed that greenhouse gas emissions continued to rise last year despite the economic slowdown caused by the global response to the coronavirus pandemic.
The good news is most policymakers recognize the scale of the problem. Now, the challenge is agreeing on an adequate solution.
President Biden is committed to addressing climate change. During his first few days in office, he signed several climate executive orders. And more recently, he outlined a sweeping, $2 trillion infrastructure plan designed, in part, to tackle several climate issues.
But his approach will not garner the support it needs on Capitol Hill. (Even he said it was a negotiation starter and that “compromise is inevitable.”) The political appetite for it is absent.
U.S. climate policy must be efficient and durable. For decades, economists have supported the use of price signals to change markets. And today economists, a growing number of businesses, and some policymakers support using taxes to change behavior, not subsidies and regulations that hide costs and are less efficient than taxes.
A carbon tax is the most effective and pro-growth policy. It would create a free-market incentive for consumers and businesses to reduce carbon emissions while simultaneously growing the economy, which is more important than ever given the existing burden of our federal deficits and debt.
Finally, climate change is a global problem. Nearly 50 countries price their carbon pollution, with more expected to follow suit. Pricing carbon and implementing carbon border adjustments will leverage the power of global consumption to drive down the carbon content of goods and economies. It will also allow the United States to leverage the clean energy investments we have made and give us a competitive advantage over many of our economic competitors.