Public Views on a Carbon Tax Depend on the Proposed Use of Revenue

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This is excerpted from a 2014 University of Michigan report from the National Surveys on Energy and Environment.

Conventional wisdom holds that a carbon tax is a political non-starter. However, results from the latest version of the National Surveys on Energy and Environment (NSEE) provide evidence of substantial public support for a tax on the carbon content of different fossil fuels when specific uses of tax revenue are attached. A majority of respondents support a revenue-neutral carbon tax, and an even larger majority support a carbon tax with revenues used to fund research and development for renewable energy programs. The carbon tax coupled with renewable energy research earns majority support across all political categories, including a narrow majority of Republicans. These findings generally confirm previous NSEE results when revenue use options are linked to carbon taxation. These are among the latest findings from the Spring 2014 NSEE from the Center for Local, State, and Urban Policy at the University of Michigan and the Muhlenberg College Institute of Public Opinion.

Key Findings

  1. Most Americans oppose a carbon tax when the use of tax revenue is left unspecified. Overall support for such a tax is 34% in the latest NSEE survey. Attaching a specific cost to the carbon tax reduces overall support to 29%.
  2. A revenue-neutral carbon tax, in which all tax revenue would be returned to the public as a rebate check, receives 56% support. The largest gains in support come from Republicans.
  3. A carbon tax with revenues used to fund research and development for renewable energy programs receives 60% support, the highest among tax options that we presented. Majorities of Democrats, Republicans, and Independents each express support for this tax.
  4. Most respondents oppose a carbon tax with revenues used to reduce the federal budget deficit. Overall support for such a tax is 38% with a majority of Democrats, Republicans, and Independents each expressing opposition to this tax.
  5. When asked which use of revenue they prefer if a carbon tax were enacted, pluralities of Democrats, Republicans, and Independents each prefer renewable energy over tax rebate checks or deficit reduction.

My read of this and similar polling is that the US could pass a revenue-neutral carbon tax if it is well-crafted. What will get the conservatives into the boat is to ring-fence the revenues so the money doesn’t get gobbled up in the general fund. Just for discussion, say 80% of the revenue is earmarked for rebate like Dr. James Hansen’s Fee and Dividend. The balance of 20% funds a public-private partnership for innovation in technology-neutral clean-energy and climate adaptation. I would like to include geo-engineering research in the mission, but I suspect that’s too emotionally explosive.

Designing a mechanism for allocation of the R&D fund is also a real challenge. To recommend the budgeting and allocation design – how about a reprise of the President’s Blue Ribbon Commission? I even have a candidate dream team for you, with Dr. Jane C. S. Long to chair. Jane led the California Council on Science and Technology team who produced California’s Energy Future — The View to 2050. Even better would be to make a partnership of Dr. Long’s CCST team and the Energy Research Partnership team.

A US unilateral carbon tax is a big step forward, but alone it won’t get the job done. We need buy-in by enough of the developing nations to attenuate the principal source of future emissions growth. I am convinced that there is a solution to that challenge: that it is to structure this carbon tax as the US component of a Common-Commitment as proposed by the team of David J. C. MacKay, Peter Crampon, Axel Ockenfels & Steven Stoft How to negotiate a climate agreement that will actually work. I don’t know what the numbers would be, but the carbon tax revenue splits would have to be adjusted to support the US share of Green Fund payments. What would be the politics of American support for a Common Commitment deal?

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