The College Republicans’ Misguided Support for a Carbon Tax

By Elliott Raia / Nicolas Loris / @NiconomistLoris / April 06, 2018 /

In what many view as a stark about-face, College Republicans across the country are endorsing a carbon tax to address climate change.

As one young Republican put it, “I think students really want to have a solutions-based discussion.” If that’s the case, the conversation should be over before it begins, because a carbon tax is a costly non-solution.

For years, many on the political left have sung the praises of pricing and regulating carbon dioxide, no matter the cost. Several notable economists on the right and now various chapters of the College Republicans are picking up the same torch by endorsing a carbon tax.

Specifically, they are endorsing the Climate Leadership Council’s proposal for a gradually increasing carbon tax beginning at $40 per ton.

The pitch goes that a carbon tax is a “free-market solution” as the government places a price on carbon dioxide emissions to internalize a negative externality.

Rather than have a messy hodgepodge of policies of regulations and subsidies to reduce carbon dioxide, all companies would be subject to the same gradually increasing carbon fee.

Thus, the market would determine if it were more economical to build a coal-fired power plant (and pay a fee for the carbon dioxide emissions it generates) or a handful of wind turbines.

Of course, companies would simply pass those higher costs onto American families and businesses. In response to those concerns, carbon tax proponents like the Climate Leadership Council propose to give the tax revenue back to families in the form of a dividend. They predict about $2,000 per family of four per year.

Like every other regulatory or subsidy scheme to reduce carbon dioxide emissions, a carbon tax is by no means a free-market solution. It is egregious to call it a solution at all.

Eighty-two percent of all energy consumed by Americans comes from conventional sources, such as coal, oil, and natural gas. Levying a price on carbon dioxide will directly raise the cost of electricity, gasoline, diesel fuel, and home heating oil.