How the US could lead a global climate compact
TheCOVID-19 pandemic and recent climate disasters have hammered home the reality that nations are powerless to confront today’s global challenges alone. These crises require unifying national leadership and global collaboration rooted in a recognition of the science.
Climate policy in America has stalled because of a misunderstanding of the threat, partisanship and disagreements on what to do. International climate agreements have failed because nations that do not reduce emissions are not penalized. Meanwhile, our climate is changing rapidly and as a resultwe are experiencing more intense natural disasters (or rather unnatural disasters because of our impact on the climate). But if theUnited States chooses to sit out climate policy, we not only risk careening into an irreversible climate crisis, we also yield enormous influence over the global policy agenda to other powers.
China is seizing that opportunity: President Xi Jinping recently announced that China intends to reach carbon neutrality by 2060. TheUnited States can still step up. Our research shows thatU.S. climate action could lead to global climate action even without an international climate agreement.
By combining domestic climate policy with climate-based foreign policy, theU.S. canmobilize coalitions toward climate action while rebuilding the global economy.
There are two key steps: First, pass a carbon tax and dividend bill that unifies national support around a common goal during a historically divisive time. Then, form a “global climate compact” of nations committed to reducing carbon emissions by penalizing inaction. This can be a new start where America brings nations together to collaboratively transition to a sustainable future.
Step one: TheU.S. Congress would pass a carbon tax and dividend plan before the end of 2021, putting a price of $25 on every metric ton of CO2. The tax would be collected at the source (a petroleumwell head or coal mine), causing the price of carbon-based products to increase slightly. Gasoline at the pump would cost about 25 cents more per gallon. The taxwould increase each year until 2030.
The governmentwould not spend the revenue, but return every cent, except tax collection costs, to adult citizens in equal amounts every quarter. For about two-thirds of Americans, the dividendswould exceed the carbon taxes embedded in their purchases, providing them with a net cash bonus at a time when many are struggling. The poorest would receive close to three times more than what they pay in carbon taxes.
This plan pushes consumption away from fossil fuels, as consumers shift to lower- or zero-carbon substitutes. Rising demand for these productswould unlock the creative power of inventors, researchers and industrialists to develop sustainable solutions for a livable climate.
This approach is equitable, would create jobs and protect the environment through a sustainable and inclusive economic recovery— all without new government expenditures or expansion. Its simplicitywould ensure transparency and prevent revenue frombeing diverted. While other policies are also needed, the carbon tax is the single most effective action theU.S. can take tomove toward net-zero emissions by 2050.
Step two: A global climate compactwould ensure that countries act jointly and aggressively to reduce carbon emissions. This approach is proposed by professorWilliamNordhaus of Yale Universityin his recent article in Foreign Affairs, “The Club Approach.” He describes why the Kyoto protocol and Paris agreement have failed: Countries sign on, do little, incur few costs yet reap climate benefits fromother countries’ emission reductions.
Nordhaus demonstrates an alternative through his analysis. Countries determined to fight climate changewould band together by placing an agreed minimum price on carbon along with penalty tariffs on countries that fail to do so. Free riding is no longer free. The compactwould grow. By leading the global climate compact, theU.S. will ensure its economic competitiveness and technological dynamism while restoring collaboration and stability in a dividing world.
In “The Strategic Case forU.S.
Climate Leadership,” George Shultz, James Baker and Ted Halstead argue that countries pioneering transformative carbon-replacing technology will become theworld-leading technology powers and set the new rules of the game that will govern global trade. Carbon pricing mechanisms are emerging around theworld and could end up penalizingU.S. inaction. If it does not lead, theU.S. may be compelled to followthe rules others make.
The windowof opportunity for theU.S. to step up is rapidly narrowing. This plan calls for theU.S. to lead global climate policy and assist in uniting a dividedworld to protect our shared home.
RoyWehrle is emeritus professor of economics at theUniversity of Illinois at Springfield; DonWuebbles is theHarry E. Preble professor of atmospheric science at the University of Illinois; Francine van den Brandeler leads research and policy analysis on climate and water atGreenleaf Communities. They are co-authors of the report, “Addressing Climate ChangeUsing a Carbon Tax and Dividend PlanWithin a Global Climate Compact.”