BUSINESS

Obama Should Price Carbon Emissions To Curb Climate Change, Report Argues

When government agencies analyze energy projects, they don't consider the long-term costs of pollution.
A new report argues that attaching a price to the carbon emissions of energy projects could spur investment in more sust
A new report argues that attaching a price to the carbon emissions of energy projects could spur investment in more sustainable projects. Above, a coal-fired power plant in Holcomb, Kansas.

The U.S. government doesn’t attach a price to harmful greenhouse gas emissions when it evaluates long-term energy projects. An influential Washington policy group with close ties to the Obama administration argues that it should.

The Center for American Progress said in a report Monday that President Barack Obama ought to order federal agencies to take into account the hypothetical price of every metric ton of carbon emitted by potential projects such as pipelines, power plants and other proposals they assess that generate and transport energy.

Because pollution costs typically aren’t taken into account now, CAP said, the U.S. economy consumes more fossil fuels than it would if the price of fuels such as oil and coal accurately reflected the costs of pollution.

Putting a price on carbon would force government agencies and businesses that need government money or approval to finally consider the long-lasting effects of pollution on the world’s climate when evaluating the costs and benefits of future projects, CAP said.

Carbon pricing also could spur new investments in sustainable projects that cleanly generate energy such as solar power and windmills because these projects might be less costly than energy from oil or coal, according to CAP’s report.

It also would help the U.S. do its part to limit global warming to “well below” 2 degrees Celsius (3.6 degrees Fahrenheit) above pre-industrial levels, the goal that nearly 200 nations agreed upon in December to combat climate change.

“As the world unites to fight climate change, more and more countries are turning to carbon pricing as a means to reduce their greenhouse gas emissions,” CAP said. “By putting a price on carbon, governments can correct the market’s failure to account for the climate costs of burning fossil fuels; in so doing, carbon pricing mechanisms encourage polluters to find cleaner, lower-carbon processes.”

Big companies such as Microsoft, General Motors and Walt Disney already apply a price to carbon, CAP said, in part to avoid over-investing in carbon-heavy projects that could lose value in a world seeking to limit carbon emissions.

Federal and state governments should do the same, CAP said.

“Unwise commitments to carbon-intensive energy infrastructure could leave the broader U.S. economy unable to adapt quickly in a world that needs to limit warming to 2 degrees Celsius above pre-industrial levels,” CAP said.

CAP’s recommendation carries particular weight in Washington because of its ties to the Obama administration and the Democratic front-runner to replace him, former Secretary of State Hillary Clinton. Top officials at CAP held senior positions in the Obama administration. The organization’s founder, John Podesta, is chairman of Clinton’s presidential campaign.

The policy group urged Congress to approve a new law that would require federal agencies to consider the cost of carbon emissions when reviewing permit applications for energy infrastructure projects, but “given Congress’ current intransigence on climate change policy,” CAP said, either Obama or his successor should enact the provision through executive orders.

For example, CAP identified three existing executive orders from the White House (orders 12893, 13653 and 13677) that Obama could use to require federal agencies to consider the price of each ton of carbon emissions.

States, too, should follow suit when their local utility commissions rule on permit applications for potential energy projects, CAP said.

Already, the federal Energy Department and utility commissions in Minnesota and Colorado have utilized carbon pricing when evaluating some projects, CAP said.

The federal government has employed some estimates for the cost of each metric ton of carbon emitted, which ranges from $11 to $105 per ton, CAP said.

The International Energy Agency estimates that carbon emissions should be priced at $140 per ton by 2040 in order to keep global warming below 2 degrees, according to CAP’s report.

The federal government ought to act soon: In 2012, the International Energy Agency estimated that the world’s existing power plants, factories and other projects already were responsible for nearly 80 percent of all carbon pollution that could be emitted by 2035 before exceeding the 2-degree limit.

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