Price on carbon must be part of this year’s climate legislation

Navajo Generating Station was a 2.25-gigawatt, coal-fired power plant located on the Navajo Nation, near Page, Arizona. The plant provided electrical power to customers in Arizona, Nevada, and California but closed on November 18, 2019 - photo: Nathan Rupert, licensed under CC BY-NC-ND 2.0

Opinion

Our nation’s lawmakers are currently working to craft and attempt to pass a package of spending measures and policies aimed at transforming America’s infrastructure and tackling climate change.

During an Earth Day summit with world leaders, President Biden committed the U.S. to reducing greenhouse gas emissions 50 to 52 percent by 2030 compared to 2005 levels. To achieve that goal, Biden has proposed spending hundreds of billions of dollars on electric vehicle charging stations, incentives for consumers to purchase EVs, retrofitting homes and businesses to be more energy efficient, and upgrading the nation’s energy grid to facilitate the transmission of renewable energy throughout the country. The proposal calls for a clean electricity standard mandating that all U.S. electricity be generated with non-fossil fuel sources by 2035. 

We would like Reps. Amodei, Horsford, Lee and Titus, and Sens. Cortez Masto and Rosen to ensure that a robust price on carbon is part of this package of policies. Economists say carbon pricing is “the most cost-effective lever to reduce carbon emissions at the scale and speed that is necessary.” For us here in Nevada, a policy like this would mean cleaner air with rapid health improvements, less impact due to rising temperatures and drought, and lessened wildfire risks.

According to the 2020 Status of Energy Report, Nevada has more than tripled its renewable energy production since 2011, with 20% of our electricity generated from renewables. We continue to develop our abundant renewable energy resources such as geothermal and solar. However, we are still heavily dependent on natural gas for our energy needs, with 68% of our energy being generated by natural gas. A fee on carbon would encourage less reliance on natural gas and more reliance on renewable energy sources. 

Here are three key reasons why it is essential for the U.S. to include carbon pricing in our strategy to address climate change:

First, it puts us on track to net-zero by 2050. The carbon-fee-and-dividend policy prescribed in the Energy Innovation and Carbon Dividend Act (H.R. 2307) sets a price that starts at $15 a ton of C02 and increases $10 a ton annually. Resources for the Future calculates that by 2030 this policy will reduce U.S. emissions more than 50% below 2005 levels, which is in line with President Biden’s commitment.  

Next, it’s a fast, effective policy across the whole economy. A clean electricity standard would reduce emissions from power plants, but that only accounts for 25% of greenhouse gas emissions. An economy-wide price on carbon, however, reaches into every sector — electricity, transportation, industry, commercial/residential real estate, agriculture and land use. It’s also quick to set up, leading to meaningful impact in a matter of months.

Finally, it puts money in your pocket. A carbon tax becomes affordable for ordinary Americans when the money collected from fossil fuel companies is given as a dividend, or “carbon cash back” payment, to every American to spend with no restrictions. This protects low- and middle-income Americans who otherwise might not be able to afford the transition. Studies show that the monthly carbon cash back payments are enough to essentially cover increased costs of 85% of American households, including 95% of the least wealthy 60% of Americans. 

Beyond those reasons for action here at home, we’re under pressure from other countries that are already pricing carbon. The European Union announced it will impose a carbon border tax, beginning in 2023, on imports from nations that do not have an equivalent carbon price. When this goes into effect, American exporters will be subject to the European carbon tax, placing them at a competitive disadvantage. However, if the U.S. implements its own carbon price and carbon border adjustment, the policy can keep American businesses competitive and motivate more nations to price carbon themselves. The Biden administration has floated a carbon border adjustment, but based on the World Trade Organization’s rules, we would likely need to put a price on carbon here at home, too.

As Congress gets to work on legislation designed to meet America’s commitment to reducing greenhouse gas emissions, it’s clear that a robust price on carbon is an essential tool that must be included. 

In June, concerned citizens from Nevada held meetings with the state’s federal representatives in an effort to urge passage of this crucial energy policy.


Susan Potts is a volunteer with the Carson City chapter of Citizens’ Climate Lobby. Mark Reynolds is Executive Director of Citizens’ Climate Lobby.