I know that it sounds far-fetched given that President Donald Trump recently announced he will exit the Paris Accord on climate change. But even so, a domestic deal on carbon emissions could be a huge win for the embattled president that could make a lot of people from all over the map happy.
Here are 10 reasons why:
1. Power suppliers want it.
At a recent Federal Energy Regulatory Commission technical conference, a call for a price on carbon is about the only thing that the electricity generators in the room agreed on. They know a price on carbon is coming; they just don’t know how it will be structured or when it will arrive.
2. It would inject a serious level of certainty into the market.
Investors don’t know when a price on carbon will be set, or how much it will be. The sooner they know what they’re dealing with, the sooner they can lower their discount rate and invest more today.
3. It will spur innovation.
A price on carbon doesn’t automatically kill fossil fuels, but it does send a strong signal that there is a timeline for innovation and a clear reward for it. Innovation in the U.S. will drive the export of cleaner energy technologies to other markets. To steal a phrase from our president, it will be a beautiful thing to set a price, step back and watch the markets do what markets do best – innovate.
4. Big business wants it and has already planned for it.
More than 1,200 companies, including energy giants Exxon Mobil and Chevron, along with Google, Apple, Cummins, General Motors, etc. already use a shadow carbon price of some sort in their long-term planning and decision-making. Our biggest corporations are not only ready for a price on carbon, they are actively preparing for it, so a price on carbon won’t trigger a massive shock to the economy. In some respects, the transition has already taken place.
5. It will give nuclear energy a fighting chance.
You can’t save both coal and nuclear. In fact, I’d argue that natural gas has pretty much killed coal dead already. That said, a price on carbon gives nuclear power and all its well-paying jobs a fighting chance.
6. It provides clear cost targets for carbon capture and sequestration projects.
Carbon capture and sequestration technologies for power plants are new, and, unsurprisingly, expensive in practice. A price on carbon will give distinct targets for what costs these technologies must achieve to be viable.
7. It can end the patchwork of regulation with one simple rule.
Without a clear way forward that applies in every state, we will be left with a patchwork of state and local-level incentives/standards/mandates that continue to frustrate businesses and stifle innovation. A national price on carbon could stop this mess. Plus, it’s consistent with Trump’s pledge to reduce the overall number of regulations.
8. JOBS, JOBS, JOBS!
Clean energy is a massive job creator, having increased over 100 percent in the past seven years. Coal mining and manufacturing jobs have been lost more to automation than anything else. Wind and solar jobs have not been automated, and it will be very hard, if not impossible, to do so. On top of that, some of the best wind and solar project potentials are in some of the reddest states in the Union.
9. It has bipartisan support.
A price on carbon has strong potential to be very appealing to both Democrats and Republicans. At least 20 Republican members of the House support action to combat climate change. Even the Department of Defense recognizes that a changing climate will make peace harder to achieve because it will further destabilize already volatile regions of the world. And, it would be perceived as a win for Trump that eluded his predecessor.
10. It’s a “win-win” for everyone.
Remember, a price on carbon is not synonymous with a tax. Under a system called Carbon Fee and Dividend, the money collected from those who emit carbon is put into a pot, then distributed to every U.S. citizen at the end of the year. If we the people are bearing the cost that carbon already imposes on our economy, shouldn’t we get the money? Dividends for a family of four are projected to be nearly $4,000 a year within the decade.
Jobs, market certainty and innovation. Oh, and there are a bunch of environmental and health benefits, too.
Mr. President, here is your big win. It’s there for the taking.
Joshua Rhodes is a postdoctoral research fellow in the Energy Institute at The University of Texas at Austin.
A version of this op-ed appeared in Fortune.
To view more op-eds from Texas Perspectives, click here.
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