The accumulation of carbon in the Earth’s atmosphere and oceans is the greatest market failure in history. It is settled science that carbon emissions have contributed significantly to global climate change, manifest in warmer temperatures, higher sea levels, more dramatic weather events, and the acidification of saltwater. But these net costs are not incorporated in the prices of carbon fuels.
- Several factors have come together to give new attention to an innovative policy solution that has surprising appeal across party lines:
- The surplus of carbon emissions in the atmosphere, caused by human activities, is viewed as a business reality by key constituencies of both parties.
- Federal deficits have prompted creativity in identifying new government revenue sources.
Mainstream economists associated with both parties have long agreed that the externalities of carbon-burning should be internalized into its price. They argue that putting a price on carbon can provide additional public revenues, render renewable energy more attractive, and lower social costs attributable to air pollution.
With politics finally – but haltingly – catching to science and economics, the Heinz Center will begin 2013 with a program to engage both carbon producers and officeholders in shaping an effective levy.