The below article by Ellen R. Wald of Forbes presents an interesting question about what we can hope for from the oil industry-backed Climate Leadership Council. Is the trade of carbon dividends worth the cost of regulatory rollbacks?
The Climate Leadership Council’s devious plan to distract American carbon consumers
Today, June 20, the new Climate Leadership Council (CLC) announced its founding members. The CLC describes itself as an, “international policy institute founded in collaboration with a who’s who of business, opinion and environmental leaders to promote a carbon dividends framework as the most cost-effective, equitable and politically-viable climate solution.” And by “who’s who,” they do mean they are amongst the most powerful economic and political players.
EPA headquarters in Washington D.C. The Climate Leadership Council’s plan would roll back EPA regulations in exchange for a complicated tax and “dividend” plan. (Shutterstock)
Founding businesses include oil companies ExxonMobil XOM +0.29%, Royal Dutch Shell , Total and BP . Non-energy companies include General Motors GM +0.26%, Pepsi and Santander. Founding individuals include Michael Bloomberg, the billionaire former mayor of New York; Steven Chu, a former Energy Secretary in the Obama Administration; Stephen Hawking, the famous physicist, and venture capitalist Vinod Khosla. The website lists the “Distinguished Co-Authors of Carbon Dividends Plan,” the CLC’s founding document, as James A. Baker III and George P. Schultz, both former U.S. Secretaries of State and 87 and 96 years old, respectively.
If it was not understood from the CLC’s own description, the purpose of this coordination of the powerful is to advocate for a carbon tax. This tax would be in lieu of environmental regulations , with disbursements of cash or “dividends” paid out to “the American people.” Under the proposal, the carbon tax will be “implemented at the…first point where fossil fuels enter the economy.” The CLC does not say this, but historically, taxes like this trickle down to the Americans consumers. Consumers will pay for this tax at the pump, on the utility bill or on the airline ticket. It would be felt by all Americans, rich or poor, with a largely regressive impact.
The CLC’s second step proposes that the money collected from this tax be disbursed to “the “American people,” though it is not clear if this means U.S. residents or citizens, whether it includes children or whether it includes corporations. The CLC projects that, “a family of four would receive approximately $2,000” a year from the government (administered by the Social Security Administration). In other words, “the American people” would be paid back by the government for suffering through higher bills. It is not dissimilar to a convoluted money laundering scheme with a little skimmed off for government agencies. This scheme amounts to a slight of hand to make Americans think they are getting something for free .
The next step, according to this plan, is to create a border adjustment tax. So, when a company exports to a country with a similar carbon tax, that company receives a tax break from the U.S. government. But when a company imports from a country that does not have a carbon tax, the company would face tariffs.
For example, take the case of Saudi Arabian oil. Saudi Arabia does not currently implement a carbon tax, so Saudi Aramco would need to pay a tariff to the U.S. government in order to import Saudi Aramco oil to the Aramco refinery in Texas. What Saudi Arabia would likely do in this case, is impose a new carbon tax so that Aramco can avoid tariffs in the U.S. and instead pay a tax to its own Saudi government. American citizens would still end up paying more for the oil, but the Saudi government would pocket that money.
The companies see their reward in the last step of the CLC’s plan. In exchange for the carbon tax, the CLC seeks “the elimination of regulations that are no longer necessary,” including, “much of the EPA’s regulatory authority over carbon dioxide emissions…an outright repeal of the Clean Power Plan… [and] an end to federal and state tort liability for emitters.” The CLC admits that it designed this plan to make Americans addicted to receiving what appears to be free money. Of course, that money would actually come from the higher prices they paid for fuel, goods and transportation.
The well-heeled and well-connected believe the U.S. should add a tax, return most of this to “the American people” as a payoff, trigger tariffs and tax breaks that will alter global markets, and then reduce regulations and the threat of lawsuits in return for that original laundering of money.
Likely seeing that the power has shifted in D.C., the CLC has placed numerous op-eds and editorials at leading publications—conservative, independent and liberal alike—touting its policy proposal as a “conservative” or “Republican” plan. Both Baker and Schultz were Republican cabinet members in previous generations, but there is little conservative (or liberal) about a plan that would: 1) create new taxes, especially taxes with an ultimately regressive impact; 2) provide blanket monetary handouts as a new entitlement; 3) impede a global energy free market and 4) roll back regulations based on strong lobbying efforts instead of based on determinations of their efficacy and appropriateness.
Some environmental regulations are important; they help the U.S. keep air breathable and water clean in an industrialized world. If other environmental regulations are unduly onerous—and some truly are onerous and unnecessarily disruptive to the growth of the economy—then the answer is to eliminate or improve them. The answer is not to trade them for a hidden card trick that keeps the citizenry preoccupied.
Ellen R. Wald, Ph.D. is a historian & scholar of the energy industry. She consults on geopolitics & energy. Her book, Saudi, Inc., will be published in 2018 by Pegasus Books.