The Business Roundtable has released a new document, Assessing Climate Change: Principles and Policies, endorsing carbon pricing as a means to address the threat of climate change. The statement calls for implementing “a market-based emissions reduction strategy that includes a price on carbon where it is environmentally and economically effective and administratively feasible.” The “key components” of such an approach are as follows:
Placing a price on carbon. A price on carbon would provide an effective incentive to reduce GHG emissions and mitigate climate change, including through the development and deployment of breakthrough technologies. The price-setting mechanism should be implemented in a manner that achieves desired environmental outcomes while minimizing administrative burdens and implementation costs. Establishing a clear price signal is the most important consideration for encouraging innovation, driving efficiency, and ensuring sustained environmental and economic effectiveness.
Preserving the competitiveness of U.S. businesses. Policymakers must remain alert to the prospect of economic activity and associated emissions shifting to less-regulated jurisdictions (i.e., economic and emissions “leakage”) and design policy frameworks that mitigate the unique risks of leakage faced by energy-intensive, trade-exposed industries. Rebates, allowances and/or border adjustments — consistent with U.S. international obligations — could be considered as policy mechanisms to address these challenges. Policymakers must also ensure that U.S. companies are not at a disadvantage from carbon pricing policies that may be implemented abroad.
Using resulting revenues, if any, to maximize economic and environmental benefits. If any government revenues are generated by a market-based mechanism, they should primarily be used for policies that support economic growth, reduce societal impact, and provide assistance for those individuals and communities most negatively affected. This approach should be paired with at least a doubling of federal funding for research, development and demonstration (RD&D) of GHG reduction technologies.
Although the statement does not does not explicitly endorse a revenue-neutral carbon tax, such as the so-called “cap and dividend” approach, this would seem to be the most straightforward way to price carbon in a way that preserves U.S. competitiveness and fosters economic growth. It is also the best sort of climate policy Congress could adopt.