The notion of the U.S. setting a price on carbon sounds far-fetched nowadays, given that President Donald Trump recently announced he will exit the Paris climate agreement and strongly supports bringing back coal jobs.
But even so, a domestic deal on carbon emissions could be a huge win for the president and the rest of the world if his administration would only take a closer look. Here are 10 reasons why:
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Power suppliers want it
At a recent Federal Energy Regulatory Commission technical conference, a call for a price on carbon was about the only thing that the electricity generators in the room agreed on. They know a price on carbon is coming; they just don’t know how it will be structured or when it will arrive.
It would inject certainty into the market
Investors don’t know when a price on carbon will be set, or how much it will be. The sooner they know what they’re dealing with, the sooner they can lower their discount rate and invest more today.
It will spur innovation
A price on carbon doesn’t automatically kill fossil fuels, but it does send a strong signal that there is a timeline for innovation and a clear reward for it. Innovation in the U.S. will drive the export of cleaner energy technologies to other markets. To steal a phrase from the president, it will be a beautiful thing to set a price, step back, and watch the markets do what markets do best—innovate.
Big business has already planned for it
More than 1,200 companies, including energy giants ExxonMobil and Chevron, along with Google, Apple, Cummins, and General Motors, already use a shadow carbon price of some sort in their long-term planning and decision-making. America’s biggest corporations are not only ready for a price on carbon, they are actively preparing for it so that it won’t trigger a massive shock to the economy.
It will give nuclear energy a fighting chance
You can’t save both coal and nuclear. The reality is that natural gas has pretty much killed coal already. That said, a price on carbon gives nuclear power and all its well-paying jobs a fighting chance.
It gives cost targets for carbon capture and sequestration
Carbon capture and sequestration technologies for power plants are new, and, unsurprisingly, expensive in practice. A price on carbon will give distinct targets for what costs these technologies must achieve to be viable.
It will reduce regulations
Without a clear way forward that applies in every state, we will be left with a patchwork of state and local-level incentives, standards, and mandates that continue to frustrate businesses and stifle innovation. A national price on carbon could stop this mess. Plus, it’s consistent with Trump’s pledge to reduce the overall number of regulations.
It will create jobs, jobs, jobs
Clean energy is a massive job creator—solar jobs have increased 100% over the last decade. Coal mining and manufacturing jobs have been lost more to automation than anything else. Wind and solar jobs have not been automated, and it will be very hard, if not impossible, to do so, since renewable energy systems are typically built in ways that try to preserve the land, not make it uniform.
It has bipartisan support
A price on carbon has strong potential to be very appealing to both Democrats and Republicans. At least 20 Republican members of the House support action to combat climate change. Even the Defense Department recognizes that a changing climate will further destabilize already volatile regions of the world. And it would be perceived as a win for Trump that eluded his predecessor.
Remember, a price on carbon is not synonymous with a tax. Under a system called Carbon Fee and Dividend, the money collected from those who emit carbon is put into a pot, then distributed to every U.S. citizen at the end of the year. If Americans are bearing the cost that carbon already imposes on the economy, shouldn’t they get some money back?
Setting a price on carbon can bring jobs, market certainty, and innovation. And there are a bunch of environmental and health benefits, too. Trump’s big win is here for the taking.
Joshua Rhodes is a postdoctoral research fellow in the Energy Institute at The University of Texas at Austin.