Contestants from around the world have proposed hundreds of ideas that were evaluated and voted on by judges and Climate CoLab members, eventually narrowing the field to 34 winners in 17 categories. One of the more politically contentious categories was a prompt to design a national carbon price in the United States. The judges selected two winning proposals in the category, one that would create a carbon tax, and the other, a cap-and-trade program with a twist.
Adele Morris, a fellow and policy director for climate and energy economics at the Brookings Institution, developed the carbon tax project as a way to not only reduce carbon emissions but also to cut the national deficit.
"The price you pay for fossil energy right now does not reflect its environmental cost," Morris said. "The idea of taxing carbon is you internalize the prices associated with environmental damages."
Before working at the Brookings Institution, Morris was the senior economist for environmental affairs at the president's Council of Economic Advisers during the development of the Kyoto Protocol. She also worked for the Treasury Department as its chief natural resource economist.
Under Morris' proposal, the carbon tax would start at $16 per ton of carbon dioxide with a 4 percent increase above the inflation rate each year. The anticipated revenue from the tax would be $1.1 trillion in 10 years and $2.7 trillion after 20 years. If other greenhouse gases like methane were included, the revenues could be even higher. Overall, the tax would reduce emissions by 9.3 billion tons over 20 years.
"As emissions go down and the tax goes up, the net effect is that the revenue goes up linearly in the near term," Morris said.
Red meat for Republicans?
Eventually, she said, much of the revenue from the tax would go into reducing the national deficit. She estimates that the deficit could be reduced by as much as $200 billion in 10 years, and by $600 billion after that. Low-income Americans living at or under 150 percent of the federal poverty level would be exempt from the tax, and 15 percent of the tax revenue would go toward supporting services to the poorest fifth of the U.S. population.
In addition to taxing carbon, her proposal suggests cutting the corporate income tax rates from 35 percent to 28 percent. She would also get rid of a number of incentives designed to encourage more alternative energy use, including repealing the renewable fuel standard and eliminating $6 billion per year in tax incentives and direct spending for clean energy. Her plan would also suspend the Clean Air Act's rulemaking on greenhouse gases for eight years or would consider greenhouse gas emitters compliant with clean air standards if they paid the tax.
Both the corporate income tax cuts and the elimination of incentive programs for clean energy are favored by Republicans, she said.
Not only that, but the government incentives would become redundant if a carbon tax was implemented. Consumers and businesses would voluntarily switch to lower-carbon energy sources because they would become cheaper than dirtier fossil fuels, according to Morris.
MIT Competition Uses Crowdsourcing to Find Climate Change Solutions
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