A recent report on how a carbon tax would affect our economy ignores the effects of climate change and benefits of clean energy, leading the writers to inaccurately conclude that a carbon tax would depress manufacturing and employment. The report was written by NERA for the National Association of Manufacturers. Interestingly, a previous report written by NERA admits that a carbon tax could be efficient in reducing greenhouse gas emissions.
However, for the Manufacturers, the NERA analysts omit consideration of the huge drain on the economy from climate related extreme weather damages to infrastructure and businesses and natural resources. They omit, as well, the benefits of expanding American clean energy and efficiency industries.
With a carbon tax raising the cost of the carbon fuels, oil, coal and natural gas, people would buy more clean energy and also invest in technologies that reduce their energy use. Increases in American manufacturing of clean energy would lower power costs, inspire growth in other industries, and raise employment.
If the revenues from the carbon tax are mostly returned to the public instead of used to reduce the deficit, as suggested by the study, there would be a buffer for individuals and a bonus for the American economy.
A comparison of the costs of damages from emissions in a continued fossil fuel economy versus the cost of ramping up clean energy, efficiency and conservation to create a clean energy economy was done by DARA Climate Vulnerability Monitor, finding that “Economic losses dwarf the modest costs of tackling climate change.”
In addition to the $1.2 trillion loss in forgone prosperity by our failure to act on climate change, there is also the risk of unimaginable catastrophe.
A recent report for the World Bank details the costs and risks of continuing climate disruption. The carbon fuel economy is propelling us toward : “shock to agricultural production…and pressure on water resources which would cascade into effects on economic development by reducing a population’s work capacity …and risk crossing critical social system thresholds..[where] adaptation actions would likely become much less effective or even collapse.”
A carbon tax that encourages competitive growth in American industry would benefit all manufacturers and consumers.