By Josiah Neeley
July 25, 2018

The unthinkable has happened on Capitol Hill. Republican Rep. Carlos Curbelo has introduced legislation to implement a carbon tax. Starting in 2020, his Market Choice Act would establish a fee of $24 a ton on carbon dioxide emissions, which are the main drivers of human-caused climate change. The fee grows gradually over time and applies to imports as well as to domestic emissions.

While the legislation is unlikely to pass, it shows that Republicans are capable of putting forward constructive solutions on climate issues. When it comes to climate change, the assumption has often been that conservatives have nothing to say. The left tends to think conservative politicians are simply incapable of dealing with the challenges posed by global warming. And many on the right implicitly concede this argument by focusing on minimizing the problem or by taking a fatalistic approach and insisting that nothing can be done.

This is a mistake. There is no reason why conservative principles can’t be used to develop effective responses to climate change. Making emitters pay for the negative effects of their actions is a principle endorsed by such conservative luminaries as Milton Friedman, and supply-side guru Art Laffer has endorsed using carbon tax revenue to cut income taxes.

The Market Choice bill isn’t perfect. But the legislation provides a good starting point for discussion and debate, and includes several features that are key to making a carbon tax successful.

Importantly, the bill recognizes that the best way to deal with the costs of greenhouse gas emissions is not regulation but pricing, and suspends the Environmental Protection Agency’s authority to regulate greenhouse gases. Putting a price on carbon helps level the playing field for clean technologies by ensuring that the cost of burning fossil fuels is accurately reflected in the economy. Carbon pricing creates incentives for innovation, as less fossil fuel burned equates to more money saved—and this innovation could help grow the economy.

The act also includes so-called tax swaps, in that it softens taxpayer impacts by repealing the current taxes on gasoline and jet fuel in exchange for putting a price on carbon. Tax swaps are a way to counteract the higher costs that a carbon tax could have on consumers should energy costs rise, which is likely to happen. In fact, the biggest shortcoming of the current legislation is that it doesn’t use all of the revenue it raises to replace existing taxes. If a carbon tax were to replace revenue from more burdensome taxes like the corporate income tax, the net result could be more jobs and higher economic growth.

We are still a long way from a conservative consensus in favor of a carbon tax. Last week, when the House of Representatives passed a resolution condemning the idea of a carbon tax, only Curbelo and five other Republicans voted against it.

At the same time, there is cause for optimism. When the same anti-carbon tax resolution was proposed two years ago, every Republican in the House voted for it, including Curbelo. That same year, Curbelo co-founded the Climate Solutions Caucus, a bipartisan group focused on climate change legislation. Today the caucus has more than 80 members, split evenly between Democrats and Republicans.

The Market Choice Act is a clear sign that Republicans are warming up to the importance of climate change. Now that the dam has broken, it’s time for Congress to deliver Americans the carbon tax needed to drive innovation, provide regulatory relief, and stave off the consequences of climate change.

Josiah Neeley is the energy policy director for the R Street Institute.

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