Can Colleges Create a Climate for Pricing Carbon?

05/09/2017 09:50 am ET

As leaders of higher education institutions, we call upon our elected representatives to act collectively on behalf of current and future generations by putting a price on carbon. We work to prepare our students for thriving futures, over which climate change casts a dark shadow of uncertainty. Putting a price on carbon pollution is an indispensable step we can take to effectively combat climate change.

This is the opening of a letter signed by presidents of thirty U.S. colleges and universities, giving their support to the student-driven #PutAPriceOnIt campaign that is coordinated by Our Climate. Signatories so far include the presidents of Dickinson, Swarthmore, Pitzer, Wesleyan, Vassar, Fordham, Macalester, UC Berkeley and twenty-two others. They are hoping to be joined by 500 of their peers before the year is over.

“We are inviting college and university presidents to join us in calling for carbon pricing as a responsible and bipartisan response to climate change,” said Dickinson Interim President Neil Weissman. “By speaking out, our institutions can help create the political will needed for action that addresses our students’ future well-being. Speaking out will also stimulate educationally meaningful debate on our campuses.” The full text of the letter can be found HERE.

A goal of the initiative is to catalyze dialogue about climate change solutions on college campuses that will add to and amplify national conversations, helping to push through the existing stalemate and realize effective federal and state level action. Sound far-fetched? Pricing carbon is garnering support from corporate leaders and environmentalists, republicans and democrats, Trump voters and Hillary voters, conservatives, progressives and libertarians, students and retirees. With the political contention over climate change, the appeal of carbon pricing across all these constituencies as a possible solution provides an opportunity for action in an otherwise dismal scene.

CEOs of ExxonMobil, BP, Royal Dutch Shell, Shell Canada and Suncor have voiced support for carbon pricing (Rosenberg). The conservative Climate Leadership Council and Niskanen Center have called for a national carbon price, as has the bi-partisan Citizens’ Climate Lobby. The editorial pages of the New York Times, Washington Post, USA Today, Dallas Morning News and Houston Chronicle, among others, have endorsed carbon pricing, while over sixty percent of Trump voters support taxing and/or regulating the pollution that causes global warming (Trump Voters & Global Warming). Environmental groups have taken a range of positions, some supporting and some opposing, often dependent on the specifics of how a carbon price would be implemented, what would be done with the revenue, and whether the policy is linked to rolling back existing regulations.

Why price carbon?

When we purchase a product, the price we pay reflects the cost of resources used to produce, transport, store and sell the product. Producers, and ultimately all of us as consumers, pay for the labor, materials, energy, infrastructure, financial capital and other resources that are required to supply us with the product. When markets are working well, producers have powerful incentives to bring to market products that people value at cost-effective prices while using resources efficiently.

But markets are not working well when it comes to the atmosphere. Pollutants are dumped into the atmosphere, a resource shared by all of us, without consideration of the costs this imposes on people. These costs include over 200,000 premature deaths per year in the U.S. from air pollution. It includes increased cases of respiratory and cardiovascular diseases, diminished health, increased health care costs, reduced cognitive performance, lost productivity at work and missed work days and school days. The costs also include the impacts of climate change on Americans and people throughout the world that are caused by emissions of carbon dioxide and other greenhouse gases. The climate change costs are real, substantial and growing.

When coal, oil, natural gas and their byproducts are burned, the atmosphere becomes a dumping ground for carbon pollution without the consent of people who are harmed. The atmosphere, a resource that belongs to all of us, is being used for private gain without paying for the resulting costs that are imposed on others. In the process, basic principles of market systems and market ideology are violated – you pay for what you use and all parties to a transaction must consent. Neither of these principles are present when we pollute the atmosphere with climate changing greenhouse gases. This should and does offend conservatives and progressives alike.

A variety of strategies are available to counter this failure of the market. One strategy is to use the power of the market itself by putting a price on carbon pollution. This can be done as a fee placed on the carbon content of fossil energy levied at mines, refineries, pipelines, electric power plants, distributors and/or borders. The fee works its way through the entire economy, raising the prices of high-carbon energy relative to zero and low carbon energy, and raising the prices of energy intensive goods and services relative to other goods and services.

The price adjustments create incentives for energy producers and users to seek out and transition to clean energy sources with low or zero carbon pollution per unit of energy. It rewards businesses that shift from producing energy intensive goods and services to goods and services that are less energy intensive, re-engineer products and manufacturing processes to use less energy, invest in energy conservation and innovate to do all the above in new, less costly ways. It also rewards households that conserve energy and shift their spending patterns to substitute less energy intensive goods and services for those that are more energy intensive.

Each of these responses creates new opportunities for investment, employment, cost savings and profit, as other more polluting opportunities are circumscribed. The result is that we meet society’s needs for energy, material wellbeing, job growth and good incomes while conserving our shared atmospheric resource and putting the brakes on climate change.

An important question is what to do with the revenue collected from a carbon fee. By itself, a carbon fee would be regressive, negatively impacting lower income families. But if paid back to households as an equal dividend per person, lower income households, and even most households, can come out ahead. An analysis by the U.S. Department of the Treasury estimates that a carbon fee that is rebated back to households can raise the after-tax incomes of 70 percent of households, with the largest benefits as a percentage of income going to the households with the least income.

There are, of course, many other things for which the revenue might be used, which would be the object of much political maneuvering. The substantial carbon fee revenue could be used, for example, to offset other taxes, finance infrastructure investments, subsidize renewable energy and energy conservation, support research and development, or help workers in sectors that lose jobs due to the carbon fee. These and other uses will have their advocates.

Importantly, a carbon fee is not sufficient by itself to ‘solve’ climate change. Other policies and actions will be needed as well, at local, state, national and international levels. Important among these will be policies and actions in the areas of energy, electric power, transportation, land-use planning, infrastructure, environment, agriculture and research and development. But enacting a carbon fee can lay a critical foundation that sets clear signals and incentives for private sector decisions.

After signing the carbon price letter, what comes next for colleges and universities? The answer to that question is emerging.

Over 600 colleges and universities made commitments to make their campuses carbon neutral. They can and are moving forward with reducing their carbon pollution to meet their commitments. Swarthmore, Yale and others are experimenting with internal carbon prices that are helping to guide decisions on their campuses. Fordham’s students are getting out into local schools, educating high school students about climate change and carbon pricing. Dickinson students drafted and presented a resolution to the Borough Council of Carlisle, PA, calling for the U.S. Congress to act on climate change and explore a carbon fee and dividend. The resolution was unanimously approved by the Council. Villanova, Millersville, Swarthmore, Dickinson and other PA schools are organizing a fall conference that will bring 200 students from across Pennsylvania to meet with public officials and share knowledge and perspectives about climate change, carbon pricing and other climate change solutions. What else might colleges and universities do? Those conversations are underway.

Climate change, carbon fees and climate policies provide fertile material for learning, inquiry and debate on college campuses. But can these campus debates amplify a national dialogue and help create a political climate in which action on climate change is conceivable? That depends on the seriousness of purpose with which our students join the conversation and the directions they drive it.

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