Coming on the heels of the China-U.S. agreement on limiting carbon emissions, it is welcome news indeed that 196 nations at the U.N. Climate Conference in Lima, Peru, have agreed to submit detailed domestic plans over the next six months for curbing carbon dioxide emissions. This is a significant achievement, but submitting plans and adhering to them is a major challenge. The United States could become a leader on this front by adopting a revenue-neutral carbon tax with border adjustments.

A recent report by Regional Economic Models Inc. concludes that taxing carbon at its source (mine, well or point of import) and returning the tax to all American households equally in the form of monthly payments would halve carbon dioxide emissions over the next 20 years and generate more than 2 million new jobs in the same period.

Effective protection for U.S. companies would be provided by border adjustments that also would provide incentives for reducing emissions by other nations. Such adjustments, by taxing imports from countries without a carbon tax and refunding taxes to companies exporting to these same countries, would exert a powerful economic incentive for other nations to adopt a carbon tax if they wished to compete for the huge American market.

By providing a market-based approach to reducing carbon emissions, these adjustments also could circumvent disagreements between developed and developing nations about how much they should cut carbon emissions.

We can expect vigorous opposition to a carbon tax from lobbyists for the oil, gas and coal interests. It is to be hoped that the new Republican-controlled Congress can resist this and see the merit of such a revenue-neutral carbon tax, which is advocated by people of all political stripes, including Ronald Reagan’s former Secretary of State, George Shultz, and former U.S. Rep. Bob Inglis, R-S.C.

Philippa Solomon

Edison, N.J., and Winthrop

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