Climate Creativity

An “Untax” on Carbon

I recently stumbled upon a book by energy consultant Steven Stoft called “Carbonomics,” which provides a wonderful overview of various approaches to the intertwined challenges of climate and energy. If you’re looking for a layperson’s intro into these issues (as I certainly was), I’d recommend it.

What most interested me about the book was one of Stoft’s political ideas—something he calls an “untax.” Such a policy would tax carbon, but refund the money collected by the government directly back to the American people each year. There are two main advantages to this. First, it provides a powerful incentive for businesses and individuals to conserve energy and invest in renewable technology. As we saw in 1973 and 1979, major spikes in oil prices do in fact lead to dramatic conservation efforts. Pricing is a powerful tool. By raising carbon prices artificially, we effectively incentivize efficiency and renewable energy innovation. Secondly, and perhaps most importantly, an untax avoids the political stigma associated with the very word “tax.” Untax policy, unlike cap and trade or traditional carbon taxes, could have great potential to receive bipartisan political backing.

Under ACES, Congress settled for a cap and trade system, which is also a powerful tool in efficiently addressing carbon emissions. Unfortunately, one problem we have seen is the enormous political influence of big industry in the shaping of the bill. It will be interesting to see how effective this policy is in the coming years.