With 2015 confirmed as the second consecutive hottest year on record, we know we must act decisively, but who knows what should be done? A bunch of really smart people, that’s who. Amid December’s convention of 195 countries in Paris, a letter signed by 32 notable individuals was released, urging Paris climate negotiators to focus on national carbon taxes, both for their intrinsic value and as a gateway to a global carbon price. The signatories include four Nobel Laureates, three former U.S. cabinet secretaries who served under four presidents (Republican and Democrat), two former vice-chairs of the Federal Reserve System’s board of governors, three distinguished faculty members from Harvard University’s economics department, and leading carbon tax advocates from across the political spectrum. Their letter says:
Taxing carbon pollution will spur everyone ― businesses, consumers and policymakers ― to reduce climate-damaging emissions, invest in efficient energy systems and develop low-carbon energy sources.
This single policy change — explicitly using prices within existing markets to shift investment and behavior across all sectors — offers greater potential to combat global warming than any other policy, with minimal regulatory and enforcement costs.
We urge negotiators at the … UN Climate Conference in Paris to pursue widespread implementation of national taxes on climate-damaging emissions.
We endorse these four principles for taxing carbon to fight climate change without undermining economic prosperity:
Carbon emissions should be taxed across fossil fuels in proportion to carbon content, with the tax imposed “upstream” in the distribution chain.
Carbon taxes should start low so individuals and institutions have time to adjust, but then rise substantially and briskly on a pre-set trajectory that imparts stable expectations to investors, consumers and governments.
Some carbon tax revenue should be used to offset unfair burdens to lower-income households.
Subsidies that reward extraction and use of carbon-intensive energy sources should be eliminated.