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Carbon Tax Not a Conservative Policy

Yesterday’s E&E News ran an article titled “Inside conservatives’ disarray on climate.” E&E reporter Mark Matthews was inspired to write the piece by an email from Alliance for Market Solutions executive director Alex Flint. Flint’s thesis: “Anyone who denies the risk of climate change is irresponsible. And being irresponsible disqualifies anyone from being a true conservative.” According Flint, the true conservatives in the climate debate include himself, Jerry Taylor at the Niskanen Center, Alex Brill at the American Enterprise Institute, and Douglas Holtz-Eakin at the American Action Forum. All are prominent advocates of a carbon tax.

In response to the article, one of my compadres succinctly explained why the “conservative case” for carbon taxation is horse feathers:

  • No government has swapped regulations for a tax, and they won’t.
  • No government has maintained a revenue neutral carbon tax beyond the first political cycle after passage (see, e.g., British Columbia).
  • No government will pin its tax to a (rigorous) social cost of carbon, adjusted for a discount rate and the cost of raising funds.
  • No government will refrain from directing energy markets to favored technologies, undercutting the idea of a price signal by simply forcing people to buy more expensive energy.

The “conservative” perspective, at least insofar as I have had any role in articulating it, is not that climate change is a hoax or poses no risks but that we have more to fear from climate policy than from climate change itself. The rate of warming is modest and steady, not rapid and accelerating, official assessments exaggerate climate change risks, climate campaigners further hype those risks and deny climate policy risks, and the alleged “climate crisis” provides a bottomless well of excuses to expand the cost and reach of government.

The recent Fourth National Climate Assessment contains a stunning example of official climate risk exaggeration. The Assessment warns that unchecked global warming could add 8°C (14°F) to average global temperature by 2100, which supposedly would lop 10 percent off U.S. GDP in the 2090s. To get that result, the Assessment ran an ensemble of overheated climate models with an inflated “baseline” emission scenario. The model ensemble (CMIP5) projects twice as much warming as has occurred over the past 40 years. The emission scenario (RCP8.5) bizarrely assumes that coal becomes the world’s dominant energy source over the next 80 years. 

Even with that biased combo, the worst-case outcome—the 8°C warming by century’s end—occurs in only 1 percent of model projections. Somehow the Assessment forgot to mention that detail. Nor does it mention that even assuming a 10 percent GDP hit in the 2090s, the U.S. economy could still be ten times larger than it is today.

Source: Hsiang et al. 2017. RCP8.5 increases average global temperature by 8°C in 1 percent of model runs.

Progressive politicians and activists further hype climate change, declaring it an “existential threat” to civilization and the biosphere, even though the IPCC’s Fifth Assessment Report does not endorse such speculation. Specifically, the IPCC concluded that in the 21st century, Atlantic Ocean circulation collapse is “very unlikely,” ice sheet collapse is “exceptionally unlikely,” and catastrophic release of methane from melting permafrost is “very unlikely.”

Bjørn Lomborg’s recent column, “Overheating About Global Warming,” is a useful corrective to the planetary emergency narrative. To mention just two data points, since the 1920s, the individual risk of dying from extreme weather on planet Earth has decreased by 99 percent. Since 1990, a period encompassing the top 10 warmest years in the instrumental record, the relative economic impact of extreme weather declined from about 0.31 percent of global GDP to 0.24 percent. Our energy-rich (because largely fossil-fueled) civilization has made the climate much more livable and is making economic development less sensitive to climatic factors.

Turning to the other side of the risk equation, climate warriors deny we have anything to fear from carbon taxes, cap-and-trade, climate treaties, or even a “new national, social, industrial, and economic mobilization on a scale not seen since World War II.” They seek to impose an energy diet on a world where 1.1 billion people still lack access to electricity and billions more have too little commercial energy to eradicate poverty, and we’re supposed to believe no one could possibly get hurt except some fat cat coal and oil CEOs. It doesn’t get much sillier than that. 

The risks of climate policy are substantial and include higher energy costs, slower GDP growth, and lower household incomes; higher taxes, more regulation, and more deficit-spending; more litigation to grow government, reward friends, punish enemies, and enforce groupthink; more Clean Power Plan-style federally-imposed state policy cartels; and more treaty-like arrangements to make U.S. energy policy increasingly unaccountable to voters, and increasingly responsive to foreign leaders, multilateral bureaucrats, and international NGOs.

The amazing thing is that even complete decarbonization of the U.S. economy would avert only 0.034°C to 0.062°C of warming by 2050 (assuming the IPCC’s “likely” range of climate sensitivity)—less than the 0.08°C margin of error for estimating average annual global temperature. Such vanishingly small reductions in global warming would make no discernible difference to weather patterns, crop yields, polar bear populations, or any other climate-related condition people care about. So, carbon taxers are asking us to accept potentially huge costs and risks for essentially symbolic benefits.

To put the matter more simply, there is no principled or stable compromise between market-driven American energy dominance and politics-driven deep decarbonization. Domestic hydrocarbon producers are making substantial contributions to U.S. GDP growth, job creation, consumer energy savings, manufacturing competitiveness, and geopolitical influence. It is irresponsible to kill the goose that lays the golden eggs. That carbon taxation may be a more efficient goose killer than greenhouse gas regulations or keep-it-in-the-ground prohibitions does not make it a conservative policy.

Enacting a carbon tax would expose U.S. producers of coal, oil, and gas to new levels of political risk. The power to tax involves the power to destroy, and even in “moderate” plans, the carbon tax increases on autopilot, year after year. Enactment would embolden, not mollify, those seeking to bankrupt fossil fuel companies in the name of climate change. Sensible investors do not park their capital in industries the U.S. government has targeted for hostile treatment. If conservatives want to keep American energy abundant and affordable, and U.S. manufacturers competitive, they must reject carbon taxes.

Alex Flint should rethink his position. It’s irresponsible to provide bipartisan cover for one-sided assessments that hype climate change risk and deny climate policy risk. No true conservative will do it.