Combating Climate Change and Health Risks through a Carbon Fee

No one is safe from the effects of climate change. That's the key takeaway from a March report by nearly a dozen highly respected medical organizations that studied the link between climate change and risks to our health. And these aren't far-off impacts or theoretical dangers: human-driven climate change is already making people sick.

Here's just one example: A woman in southwestern Pennsylvania who had never heard of Lyme disease saw five of her friends contract the illness in recent years because of warmer weather that led to a longer season for blacklegged (deer) ticks. She has since had her dog vaccinated against the disease and checks her children for ticks on a regular basis.

It's not just people in blacklegged tick country who are at risk for negative health impacts related to climate change and its causes. Low-income communities and communities of color are particularly vulnerable to the effects of climate change and fossil fuel pollution. Communities of color are exposed to nearly 40 percent more pollution than predominantly white communities, and 68 percent of all African Americans live within 30 miles of a coal-fired power plant. Additionally, low-income communities are financially disadvantaged when it comes to relocating or rebuilding when faced with extreme weather, rising sea levels, or thawing permafrost caused by climate change. Even more than 10 years after the catastrophic events of Hurricane Katrina, parts of New Orleans are still struggling with high unemployment rates and damaged buildings.

One way to drive change in the private market and to mitigate the detrimental effects of climate change would be to implement a revenue-neutral carbon fee. Although climate change is typically considered a problem that Democrats are more interested in tackling, former Secretary of State James A. Baker III (a Republican) and other conservative leaders introduced the concept of a revenue-neutral carbon fee in a proposal earlier this year. Because the proposal is revenue neutral, it might appeal to conservatives interested in acting on climate change.

A typical revenue-neutral carbon strategy would involve a $40-per-ton fee on carbon dioxide emitted from fossil-fuel combustion at the source, which would cover the estimated costs imposed on the environment and society. Implementation of the fee could generate between $200 billion to $300 billion in revenues per year. Net revenues would be placed in a fund, managed by an administrator (Treasury Department or private contractor), and 100 percent of the money would be distributed to around two-thirds of all households in the form of dividend checks quarterly or monthly to compensate for potentially higher energy prices due to the carbon fees. In any given quarter, they may even receive more money than they spent on energy.

The advantages of such a carbon fee far exceed any negatives (see Brookings; Regional Economic Models, Inc.; Center for American Progress; and Mother Jones). First, the fee would add as many as 3 million jobs to the economy. The distributed dividend checks would give people more money to spend, and more jobs would be produced as a result, particularly in retail and health care, because they are labor-intensive industries that are strongly influenced by consumer spending. Second, the fee would incentivize utilities and other polluters to cut carbon dioxide emissions by 50 percent over the next 20 years. Third, setting a price on carbon largely leaves the decision of when, how, and where to reduce emissions to market participants, which could be attractive to conservative policymakers and voters. A carbon fee would also prompt individuals and corporations to reduce their carbon footprint while giving them the flexibility to choose how to accomplish that task. As a result, corporations could be incentivized to create innovations or switch away from coal and fossil fuels to cleaner, renewable energy sources.

A nationwide survey conducted by Yale researchers based on data gathered throughout 2016 concluded that 75 percent of Americans believe that carbon dioxide should be regulated as a pollutant. Moreover, 69 percent want to restrict carbon emissions from coal-fired power plants. A revenue-neutral carbon fee could help address the concerns of most U.S. adults by significantly reducing the carbon dioxide emissions responsible for climate change.

So what about the link to negative health impacts and increasing health care costs? Taking action to reduce carbon dioxide pollution and combat climate change through a revenue-neutral carbon fee could result in fewer health risks and reduced health care costs. That would benefit everyone, particularly low-income Americans who are disproportionately affected by climate change, and it appears to be attractive to at least some conservative policymakers and voters.