How to Win a Carbon Tax Fight
In a perfect world, this week's report from the Intergovernmental Panel on Climate Change would spark renewed interest in a U.S. carbon tax -- rather than just renewed hand-wringing over the unwillingness of U.S. politicians to push such a tax.
But getting politicians to support a carbon tax is just one part of the challenge. Equally important, and probably harder, is figuring out how to get voters to support it. Just look at Canada, where one of the two major parties campaigned on a carbon tax in 2008. The utter failure of that campaign holds lessons for U.S. political leaders.
On the face of it, Canada ought to be fertile ground for a carbon tax. There's little of the bone-deep aversion to taxes, or government in general, that defines American public life. Nor do Canadians share many Americans' gleeful contempt for science and expertise. Only 2 percent of Canadians don't believe in climate change, compared with 23 percent of Americans. And they have an almost fetishistic attachment to their snow.
So when the Liberal Party of Canada chose to make a carbon tax the centerpiece of its 2008 election campaign, it wasn't obviously a crazy idea. The Liberals weren't some radical fringe party; they had run the country for most of the 20th century. And the carbon tax idea reflected growing concern about the climate. The year before, the IPCC and Al Gore shared the Nobel Peace Prize.
"I am convinced that far too many political elites underestimate Canadians," said the party's leader, former environment minister Stephane Dion. "When you speak to the minds and big hearts of our great people, good policies translate into good politics."
I was Dion's speechwriter when he first became the Liberal leader, and though I had left politics for graduate school by the time he introduced his carbon tax idea, I was still rooting for him. Who wouldn't want a politician to appeal to the best in people and then see it validated by voters?
That's not how this story turned out. The Liberals posted one of their worst results ever, losing one-fifth of their seats in Parliament and seeing their share of the vote slip to 26 percent from 30 percent three years earlier. Dion soon resigned his post. The "Green Shift," which is how he described his plan, has been all but ignored by the party ever since. So much for big hearts.
That experience holds some lessons that American politicians, and those pushing them, ought to consider as they plan how to approach a carbon tax. The first might seem obvious: Don't propose a new tax in the middle of an economic downturn.
The Liberals couldn't have predicted that Lehman Brothers would collapse a week into the campaign, but they probably should have done a better job reading the wary mood of the electorate in the months leading up to it. Voters also didn't want to hear about higher energy prices when those prices were already surging, as they were in 2008.
Another lesson is that anybody proposing a carbon tax shouldn't assume voters get what they're talking about. After Dion introduced his idea, which got plenty of news coverage, a poll found that just one-quarter of respondents said they "fully understand" the proposal. Half said they had "a vague idea" of what a carbon tax meant, which probably meant they didn't. The rest said they didn't know.
The trouble wasn't just explaining how a carbon tax worked, but also conveying the particular tweaks Dion had included to make his plan more palatable. For example, as a concession to concerns over already high gas prices, his proposal would exclude gasoline. The problem is, most people didn't notice: Two-thirds believed the tax would apply at the pump.
Finally, Dion went from describing his idea as revenue-neutral, with every dollar used to lower other taxes, to talking about using some of the money to fund other projects, such as tax credits for the poor. Convincing voters that his carbon tax didn't represent a new government program was always going to be hard, and he made that job even harder.
So for Democrats considering a carbon tax, the Canadian experience yields the following observations. First, this is as good a time as any: The economy is in the midst of a long, slow recovery, and gas prices have been roughly steady since 2011. Second, make it simple. Third, define "revenue-neutral" to mean not just neutral to the budget, but also neutral in the distribution of benefits across society.
Unfortunately, the lesson that hangs over each of those points is this: Persuading voters to embrace a carbon tax is really, really hard. But doing nothing is worse. Here are Canada's projected emissions of carbon dioxide, compared with its pledged reductions by 2020:
This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.
To contact the author on this story:
Christopher Flavelle at email@example.com
To contact the editor on this story:
Stacey Shick at firstname.lastname@example.org