More people support a carbon tax earmarked for climate fixes rather than one that puts money into their own pockets. That surprising finding challenges conventional wisdom on the best way to get a carbon tax over the Congressional finish line in the US.
The Associated Press and NORC Center for Public Affairs Research, a non-partisan institution at the University of Chicago, polled 1,202 Americans on the question last November. Before being told how the funds would be used, just 44% of those surveyed said they would support a carbon tax.
Support rose when respondents were told how the funds would be used. The highest support came when the survey question stated that proceeds from carbon tax would be used for environmental restoration (67%), research and development for clean energy (59%), and public transportation (54%). A relatively modest 49% supported a carbon tax whose funds would be distributed as a tax rebate to households. The poll’s margin of error was +/- 3.9 percentage points.
Many have assumed a rebate would be necessary to win public support for a carbon tax. The Citizens’ Climate Lobby, for example, backs such a proposal, which it says could cut carbon emissions to 50% of 1990 levels while driving economic growth and ensuring affordable energy in a transition away from fossil fuels. Under such a scheme, the price of high-carbon fuels would rise compared to low-carbon energy (such as solar, wind, and electric vehicles powered by renewables), but taxes on carbon emissions flow back to households so their net incomes remain roughly the same.
A price on carbon is already in place in California through its cap-and-trade system, the fourth largest such setup in the world. Instead of a rebate, it funnels money into everything from hydrogen fuel infrastructure to more sustainable agriculture. It caps emissions from about 450 businesses—mostly large power plants, industrial plants, and oil-and-gas companies—that are responsible for the bulk of California’s greenhouse gasses. Firms receive or buy credits each year for their greenhouse gas emissions. The more they release, they more credits they need. That has raised gasoline prices by about $0.12 per gallon at the pump, but brought in nearly $700 million per quarter for clean-energy investment, and accelerated California’s transition away from fossil fuels.
With a firm majority of Americans now acknowledging climate change, even among Republicans (70% say it’s happening now), the question seems to be how, and how much, we pay to address it. The appetite for big spending is limited. The poll found a majority of respondents would be willing to pay to address climate change—57% would pay at least $1 per month—but only 23% would pay at least $40 month and 16% agreed to pay $100 or more. Whatever “tax” is proposed—whether a direct levy or indirect price on carbon in the supply chain—may hit public resistance as it climbs to the legislative levels needed to implement such a major change.