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PSR Policy on Carbon Pricing

November 12, 2016

PSR recommends a Price on Carbon applied to Fossil Fuels as a Tool to Help Prevent Global Climate Catastrophe

Statement:  Physicians for Social Responsibility urges the United States to adopt a carbon price on fossil fuels to control global emissions of carbon dioxide and methane, the chief causes of global climate change.

Background: The Intergovernmental Panel on Climate Change (IPCC), the United States National Academies of Sciences, the 2015 Lancet Commission on Health and Climate Change, and many others have identified climate change as an enormous threat to health. The Lancet Commission added that, “tackling climate change could be the greatest global health opportunity of the 21st century” [1]

What we face is a true planetary emergency.  The most important cause of climate change is the release of climate-warming greenhouse gases primarily due to human activity in the form of mining and burning of fossil fuels:  chiefly coal, natural gas (methane), and petroleum.  Carbon pricing offers the promise of being a very efficient tool to control fossil fuel emissions, while we recognize that other forms of mitigation will be needed to address other human activities that now are contributing to climate change by releasing greenhouse gases.

As an organization of physicians, other health professionals, and concerned citizens, Physicians for Social Responsibility focuses on the health-related aspects of climate change. We embrace the broad definition of health, as enunciated by the World Health Organization in 1948 that includes peoples’ mental and social well-being, and not just the absence of disease and infirmity. The threats to health posed by climate change include heat and heat illnesses, severe weather events; emerging infectious diseases; threats to agriculture resulting in famine; rising sea levels; increase in environmental refugees; increases in air pollution (particularly ozone); and violence, conflict and societal disruption.  These factors are predicted to combine to cause severe economic effects. [2] 

There is general agreement among economists that fixing a price for the right to discharge greenhouse gases into the atmosphere is an effective means to reduce the emission of carbon dioxide and methane. The IPCC glossary defines the carbon price as “What has to be paid (to some public authority as a tax rate, or on some emission permit exchange) for the emission of 1 tonne of CO2 into the atmosphere”, where one tonne equals 2200 pounds.

At present, the industries whose activities lead to the release of carbon dioxide do so without paying for the health, environmental, and economic impacts on current and future generations.   Setting a price for carbon emissions will increase the energy costs paid by many consumers. However, market responses to the negative incentive of a tax will likely reduce the use of fossil fuels throughout the economy and produce efficiencies and alternatives to fossil fuels that will help mitigate the price increases. In addition, the revenues generated from carbon pricing will help governments to address the costs of climate change to health and the environment.

Carbon Pricing Options: The Lancet Commission has stated that “(global) carbon pricing (is) the single most powerful strategic instrument to inoculate human health against the risks of climate change”Establishing a price for emitting carbon pollution into the atmosphere will incentivize businesses and consumers to respond by changing their activities in order to avoid having to pay the total cost for fossil fuel use.  Individuals, governments and corporation will similarly be encouraged to lower fossil fuel use, adopt renewable energy sources, and avoid products whose production result in carbon dioxide releases. Governments and utilities can support these efforts by investing in research, energy efficiency, low-carbon transportation, and the generation of renewable energy.

A few implementations of carbon pricing have already demonstrated the effective reduction of carbon dioxide emissions without economic disruption.  One form involves establishing a cap on the total carbon emitted by a region, and to hold public auctions to sell and trade carbon emissions permits. Market forces set and adjust the carbon price. This has been used with initial good results by the European Union and the Regional Greenhouse Gas Initiative (RGGI) in the northeast United States. [3]  British Columbia has adopted a carbon tax [4]  that is revenue-neutral, meaning that every dollar generated by their carbon tax is returned to its citizens through reductions in other taxes.[5]

An effective carbon price will: (1) reduce the total emissions of carbon dioxide and methane, (2) lower the global health and environmental costs of carbon-based fuels because their use will decline, (3) improve the cost-competitiveness of renewable energy-based fuel sources and other energy efficiency measures, and (4) reduce and remove health burdens, particularly those that fall on low-income and racial/ethnic minority communities, children, and other climate-sensitive populations. These benefits are likely to be greatest for those who live in close proximity to where the fossil fuels are mined, burned, or both. 

Criteria for What Would Be Effective and Fair Carbon Pricing Policies for Fossil Fuels

1. The carbon price must be high enough to reduce carbon dioxide and methane emissions.  For this to occur, the carbon price must be monitored closely and adjusted as needed to attain the goal of zero fossil fuel emissions (“net zero”) in the U.S. by 2050.

2. The carbon pricing policies should be implemented without an additional burden on already vulnerable individuals or communities.  Indeed, a proper and “just” carbon policy should reduce these burdens along with the disproportionate health burden that vulnerable individuals and communities experience.

3. The resultant revenue should be prioritized to these communities:

         a. Either distributed equitably to households (revenue neutral fee) or,

         b. Used to support social needs, build public infrastructure, and support the transition to clean energy.

4. There must not be any special-interest loopholes. All sectors of the fossil fuel industry must participate as determined by their emissions.

[1] Watts, Nick et al., "Health and climate change: policy responses to protect public health", The Lancet, 7 November 2015.

[2] Lockwood, A.H. Heat Advisory: Protecting Health on a Warming Planet, MIT Press, Cambridge, MA, 2016

[3] The Regional Greenhouse Gas Initiative (RGGI) is the first market-based regulatory program in the United States to reduce greenhouse gas emissions. RGGI is a cooperative effort among the states of Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New York, Rhode Island, and Vermont to cap and reduce CO2 emissions from the power sector. 

[4] A 10-dollar tax was levied per ton of carbon dioxide in 2008 and raised to 30 dollars by 2012. It has reduced emissions by 5 to 15 percent with negligible effects on aggregate economic performance.

[5] Overview of the revenue-neutral carbon tax, Ministry of Finance, Province of British Columbia.

Page Updated November 17, 2016