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The biggest first step to reducing greenhouse gas emissions is for the US government to implement a carbon fee for all fossil fuels at the source of production.

The US must lead

The US has the highest cumulative emissions per person of the world. That means that Americans have benefited the most from burning fossil fuels and that we must lead in the effort to reduce emissions. It should be obvious that companies shouldn’t be able to dump waste for free in a shared resource like our air.

A carbon fee

Fees or taxes are generally used by governments to discourage a behavior (eg. smoking). A carbon fee would be charged for producing fossil fuels. That means that mining coal, drilling for oil, or fracking for natural gas would cost more. The companies would pass these costs on to consumers, who would have to pay more for electricity and gasoline. But the concept of supply and demand shows that consumers would find ways to use less as costs increase.

Innovation happens

Some of these ways are sure to include increased demand for more energy efficient appliances, offices, and homes. American companies would be the first to develop top technology that could then be exported to other countries. That means that action in the US has ripple effects that include reduced fossil fuel consumption worldwide and a stronger manufacturing sector in the US.

This is not another tax on individuals

Where does all that revenue go? There are many ideas for where to put the money raised by a carbon fee. Some ideas include investment in carbon-free technology or student-loan debt relief. But maybe the fairest solution is to reduce everyone’s income tax. This would have to be done carefully to not overburden the poor who pay a higher percentage of their income towards energy and food. Done correctly, no one would pay more than they did before the fee was implemented.

There would be losers. Companies that are valued for the reserves of fossil fuels they promise to produce would see their stocks devalue unless they make a rapid change to innovate for a less carbon-intensive world. But many companies would see benefits as they develop the more efficient products that Americans and people worldwide would demand. Most people wouldn’t see a financial change, but would reap health benefits. Burning fossil fuels, kills nearly 200,000 Americans every year. Even more would avoid health costs due to air pollution.

The fee must increase each year

The carbon fee would start low and increase slowly each year. This is a signal for companies to innovate and change their business models. It’s also necessary to eventually achieve zero emissions. Remember as prices increase, people pay more and use less.

Tariffs could be used on products and fossil fuels produced in countries without a carbon fee policy. Pretty soon the policy would be adopted worldwide. Otherwise non-adopting countries would face more pressure to reduce emissions and retain manufacturing capabilities as more efficient tech is developed in other countries.

A bipartisan issue
Republicans should be able to get behind a measure that reduces income taxes for everyone. Democrats can tout their environmentalist credentials. We hear rhetoric about how the government should not choose winners and losers. But climate change is happening and that means that the laws of nature have shown us that burning fossil fuels is a losing strategy. With a carbon fee there will be new winners and losers, but only companies that fail to innovate will fall by the wayside. That sounds like how capitalism is supposed to work.

Please take a minute to let your senators and representatives know that you support the American Opportunity Carbon Fee Act introduced last week.

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