Embracing Carbon Pricing

The architects of the “Baker-Shultz Carbon Dividends Plan,” first proposed in 2017, address what they see as the complete absence of domestic and global approach to global warming. The main features of the plan are: a carbon fee of $40 per ton which escalates given certain conditions; revenues generated are returned to families; regulatory simplification, and tariffs applied to energy intense imports.

They argue for urgent action to mitigate risks from the transition to a less carbon intense world, plus the costs from physical risks due to increased weather volatility. They also hope to rectify the loss of global technological leadership in clean energy which they see as central to protecting US interests in a likely increasingly unstable geopolitical world. The plan aims to address concerns that such policies could disadvantage US corporations, and offer a free ride to other heavy polluters like China and Russia. With the Democrats leaning heavily to promote solutions to climate change, the authors suggest Republicans too are starting to signal the end of climate denialism. Robert Litterman believes climate risks are so high, so too carbon fees need to start out much higher and scale back. Either way, it is time to embrace carbon pricing.

Foreign Affairs:
The Strategic Case for U.S. Climate Leadership »