For more than half a century, cheaply-priced fossil fuels have come to define the American dream. We travel freely in gasoline powered vehicles and rely on coal, oil and natural gas for heating, cooling and operating electrical devices.
In addition, everything possible is now fashioned from plastic polymers derived from petroleum or natural gas. We’ve abandoned the “reuse and repair it” mindset of the pre-WWII era and embraced instead a “throw away” plastic consumer culture.
The most urgent environmental crises today are undeniably global climate change and the buildup of plastic waste in the world’s oceans. Both are harmful externalities of the fossil fuel industry: impacts, like pollution, not reflected in the cost of the products but paid for instead by some third party.
In this case, the third party is the global public that suffers the health and monetary consequences of both climate change and ocean plastic pollution.
Governments, environmental organizations and the medical community are just beginning to glimpse the scope of externalities attributable to an economy based on fossil fuels because both climate change and plastic ocean pollution are completely novel phenomena in human history that are still spiraling out of control. That said, the already identified externalities are of epic proportion and horrifying.
For example, if greenhouse gas emissions continue on their present trajectory, the average temperature at the earth’s surface could increase by as much as 4°C (7.2°F) by the close of the 21st century, according to the United Nations. At last December’s climate summit in Paris, even a 2°C temperature increase above preindustrial (1850-1900) levels was pinpointed as the likely threshold above which climate change would be catastrophic and irreversible, prompting attendees to agree on a 1.5°C increase as the maximum allowable target.
According to measurements of NASA and others, 2015 was the hottest year on record, exceeding the preindustrial period by about 1°C. This puts the earth already half way to runaway climate disaster. Without a radical shift away from burning fossil fuels, scientists foresee, at minimum, polar melting, sea level rise of several feet, ocean acidification, coral bleaching and increasingly extreme weather causing floods, droughts, famines, disease epidemics and mass species extinction.
Similarly, if ocean plastic pollution is not curtailed, there could be more plastic than fish, by weight, in the world’s oceans by 2050, per a January 2016 report from the World Economic Forum. The estimated weight of plastic waste in the ocean exceeds 160 million tons, with more entering at the rate of a garbage truck-full per minute. Petroleum-based plastics don’t biodegrade in seawater but rather break down into increasingly smaller fragments: A recent study estimated that more than five trillion plastic particles are already afloat in the world’s oceans.
Furthermore, the chemicals associated with petroleum-based plastics threaten the entire ocean food web. Plastics are oily materials that soak up persistent oily toxins commonly found in sea water (like PCBs), plus they contain risky chemicals introduced during manufacture, like the endocrine disrupting chemicals BPA (bisphenol-A), phthalate plasticizers and brominated flame retardants. Sea creatures as varied as plankton, bluefin tuna, mussels, crabs and whales are known to be ingesting plastic debris, putting humans at risk of ingesting the same chemicals.
Carbon Tax: Internalizing the Externality
There is yet no mechanism in place to hold the fossil fuel industry accountable – financially, legally or morally – for these far reaching externalities. However, a simple tax placed on carbon would internalize the true costs of fossil fuels and consequently trigger a global shift away from dependency on fossil fuels with a practical path to solving both climate change and plastic ocean pollution. Here’s how it would work in a popular form dubbed “carbon fee-and-dividend.”
Taxing fossil fuels based on their carbon content effectively places a fee on the CO2 they would emit if combusted. The tax would be incurred at points of entry into the economy (oil well, coal mine, port), starting at a low $10-$15 per ton of CO2 and rising yearly to provide the competitive impetus for industry to move to both renewable energy sources andalternatives to petroleum-based plastics that neither persist in the ocean nor contain harmful chemicals.
Because industry would pass the resulting increase in cost of producing carbon-intensive products on to consumers, 100% of the collections could be returned to American households as cash dividends (or tax credits). A border tariff imposed on imports from nations failing to set their own carbon pricing mechanism would discourage American businesses from relocating overseas and provide the incentive for the rest of the world to follow suit.
This plan should have universal appeal in the United States because it puts money back in the pockets of consumers, is 100% net revenue-neutral for industry, and allows market forces to pick industry winners and losers. Within 20 years of initiating carbon fee-and-dividend , greenhouse emissions would fall 50% below 1990 levels while growing the economy and saving lives, according to an independent analysis commissioned by the grassroots non-profit Citizens’ Climate Lobby and performed by Regional Economic Models, Inc.
Furthermore, carbon fee-and-dividend does not pressure politicians to violate pledges made to block new taxes which add to government coffers. In fact, six House Republicans have just joined with six Democrats to form the bipartisan Climate Solutions Caucus which will, no doubt, be considering a carbon tax as a fix for climate change.
The landmark signing on April 22 of the Paris climate agreement by over 170 nations, including the United States, is viewed by many as the long-awaited death knell of the fossil fuel era. A net revenue-neutral tax on carbon seems the most transparent, fair and effective way to get the job done on a global scale.