Pricing carbon can help solve the infrastructure funding dilemma

When will Congress address our most pressing challenges? Another severe hurricane season is expected, our western states are bracing for more deadly wildfires and currently suffering the worst drought on record, and rising sea levels already threaten coastal neighborhoods. Climate change is real, occurring right now, and decisive action is needed — but the partisan Congress has so far proved unable to address the issue.

Senators from both Republican and Democratic parties have announced support for an infrastructure package, but are unable to agree on how to fund it. We have a bipartisan solution: price carbon. The industries that polluted our environment should bear the burden of cleaning it up and as the coal industry fades away, why make taxpayers, instead of the energy companies, pay to retrain displaced mine workers?

Putting a price on carbon will level the economic playing field in the energy sector, unlock market-driven innovation, and lead to the deployment of low, zero and negative carbon technologies. It will help create millions of new jobs and slash U.S. carbon emissions dramatically, making it a powerful tool for curbing climate pollution.

The European Union (EU) is planning to tax imports based on the amount of their greenhouse gas emissions, which would add a fee to the price of products shipped to Europe by U.S. companies. This plan has caught the attention of American manufacturers. “Our clients are seeing this as an additional call to action to look at decarbonizing their supply chains,” the Boston Consulting Group’s Tim Figures told The Wall Street Journal. “It sits alongside investor and ethical pressure by actually putting a value on the carbon contained in imports.”

What’s the smartest step that Congress can take? More than 3,500 economists, including 28 Nobel laureates and several past chairmen of the President’s Council of Economic Advisors and most American CEO’s recommend enactment of a carbon tax.

The word “tax” scares many politicians from embracing this common-sense solution. Some might argue that a fee on carbon emissions would have a regressive impact on consumers’ electricity and gasoline costs but this is easily mitigated. Rebating 50 percent of the tax proceeds would negate the impact on low- and moderate-income households and a portion of the proceeds could be directed to communities whose economies are tied to coal in order to facilitate their inevitable transition to new sources of employment as we shift to cleaner, less expensive energy.

A carbon fee would reduce emissions across the economy, and using the tax as a disincentive is a free market solution, which is much better than a new regimen of government regulations. It would do far more to reduce greenhouse gas emissions than a much-discussed clean energy standard, which would deal only with the electric power sector and have no impact on transportation, agriculture, buildings and manufacturing. Those sectors account for three-quarters of U.S. emissions.

Under WTO rules a carbon fee also would enable the United States, as well as the EU countries and others, to impose a border fee on goods from countries that fail to price carbon emissions. This type of border adjustment would significantly enhance the competitiveness of U.S. manufacturers in competition with products from coal-dependent economies (like China).

Yet another benefit of a carbon fee is the revenue it would generate. Even after rebates to make low- and moderate-income families whole and a portion to communities in transition, the remainder could help fund the infrastructure investments that politicians of both major parties broadly support.

Are there enough votes on Capitol Hill to enact a carbon fee? One of us sponsored a bill calling for such a fee, and the other of us has spent much of the past six years meeting with members of Congress to explain its merits. Many of them have said that they are open to the idea and just need to see enough political movement to convince them that the time is right.

In a March poll by the Yale Program on Climate Change Communication, a majority of registered voters said that global warming should be a high or very high priority for the President and Congress. In recent months powerful organizations such as the U.S. Chamber of Commerce and the Business Roundtable, as well as scores of large companies, have signaled support for carbon pricing.

History will not look kindly on a major nation with a history of being a world leader that fails to address such a profound threat to global prosperity and health. The time has come to price carbon.

Francis Rooney is a former Ambassador to the Holy See, and Republican congressman representing Florida’s 19th District. William Eacho, former U.S. Ambassador to Austria, is co-founder and CEO of the nonprofit Partnership for Responsible Growth. Rooney is a member of the group’s Advisory Board.