Friday, 13 July 2012

Getting the rhetoric right on a US carbon tax: Four lessons to be learned from the cap-and-trade fiasco

It was revealed yesterday that a bi-partisan group of US policymakers have been meeting regularly since 2011 to discuss the way-forward on climate change. One of the items on the agenda: a carbon tax. While the details remain uncertain (the discussions are embargoed under ‘Chatham House Rules’), the fact that there is a public admission that this is being discussed represents a significant step as the US seeks alternatives to the ill-fated cap-and-trade legislation that got killed by the Senate in 2010. One thing that is clear, though, is that this time legislators must get the rhetoric right (a fact that is recognised by the group themselves with the carbon tax discussion coming under the agenda heading ‘Framing and selling a carbon pollution tax’). The rhetoric on the cap-and-trade legislation within Congress was, to be frank, a mess. Here, then, are four lessons that supporters of a carbon tax must learn from the cap-and-trade experience if they are to stand any chance of seeing it become a reality at any point in the near future.

1. Decide whether the legislation is an ‘international’ or ‘domestic’ policy

This seems like an odd place to start – taxes can only be levied within the remit of a nation, no? – but the same was true of the cap-and-trade legislation. Yet it still got bogged-down in the quagmire of international relations (to be polite) and international prejudices (to be less so). In the cap-and-trade debates, Members of Congress kept pointing to the need to act on climate change because of the US’ place as the largest historical emitter in the world, because doing so was for the ‘good of the planet’, and promising that a domestic market could eventually become a global market. At the same time as doing this, they insisted that the legislation was ‘not another Kyoto’ (the hugely unpopular international treaty). All this did was open up the legislation to the attacks of those who so resoundingly rejected the Kyoto Treaty back in 1997. Why should the US act if China and India aren’t going to? They said. How could the US expect to compete with these new burdens placed on their economy which others would not have to suffer? They protested. If this is an international issue, why isn’t the US trying to solve it with an international solution? They (not unfairly) pointed out. All in all, talking about the cap-and-trade legislation through reference to the international need for action on climate change simply confused the issue, and allowed a host of attacks based not on criticisms of the cap-and-trade policy per se, but on the type of policy approach that Congress was adopting. Any carbon tax legislation must, then, emphasise the domestic benefits of this domestic policy. There is no need (rhetorically) to link it to the international arena, so legislators shouldn’t.

2. Decide whether a carbon tax is an environmental, energy, or economic policy issue

The cap-and-trade legislation was promoted on a tripartite basis: it was good for the environment as it capped harmful emissions, would help the US transition to a greener energy mix by implicitly promoting the development of less carbon-intensive technology, and would boost the economy through opening up a new market in emissions trading. While there certainly are inherent linkages between all three of these policy areas when it comes to climate change, and the cap-and-trade legislation did indeed address each to the benefit of the others, rhetorically this strategy was doomed. The logic was that if they could sell the legislation in three ways, chances were that everyone would buy at least one. This logic was flawed. By linking the cap-and-trade legislation to each of these policy issues its supporters opened themselves up to attacks on three-fronts, each of which would have been hard enough to rebut on its own.

If the carbon tax is defined as an energy issue, then it will come under attack from the powerful energy lobbies (and their proxies in Congress). They will claim – as they did with the cap-and-trade legislation – that voluntary measures would be better suited to encouraging carbon-intensive industries to re-focus their investment on greener technologies and modes of production. Likewise, Members of Congress from states whose economies depend on carbon-intensive industries (such as coal-mining) will want guarantees and major concessions to be included in the legislation before they even consider supporting it. This is not an insurmountable obstacle, but it will be enough to overcome on its own, without the added complications of making it an environmental and economic issue as well.

If the carbon tax is communicated as an environmental issue, on the other hand, then the environmental effectiveness of the legislation (no matter its details) will be attacked. Just as opponents did with the cap-and-trade legislation, there will be claims that it is a costly, ineffective, and ultimately unnecessary burden to bear. Congressional supporters of the legislation will have to develop a robust defence of how the tax reflects environmental gains. Furthermore, they will have to develop clear and persuasive arguments as to why these environmental gains need to be made in the immediate; claiming that it is a long-term investment in the current economic climate simply won’t cut it (particularly if it is over hundreds of years). Both Congress and the public are impatient, they must see the potential for gains (of any sort) to be delivered quickly by the carbon tax. Otherwise, it is doomed from the start.

If the carbon tax is deemed an economic policy – which it almost certainly will be – it will be savaged by a Republican party whose USP for the coming election (and in all likelihood for many elections to come) is their determination to never introduce new taxes. Opponents to the cap-and-trade legislation were quick to label it a tax, and the Republicans won’t levy taxes on far less popular sources of revenue (such as banks, or the top 1% of earners), let alone their energy corporation bedfellows. It is possibly worth trying to label the carbon ‘tax’ as anything but, although the potential for this is already slipping away as public discussion perpetuates the use of the label.  They could call it an ‘emissions levy’, a ‘pollution penalty’, ‘a corporate down-payment for the future health of the nation’, or perhaps try to hide it in pseudo-technical terms (‘a fiscal mechanism for sustainable development based upon annual contributions from corporate stakeholders’, perhaps). Nonetheless, whatever they may try, it will probably become (or continue to be) known as a tax (‘carbon’ or ‘climate’) as opponents and reporters alike seek a concise branding for the policy. In spite of sophisticated arguments as to where each tax dollar goes to reduce the deficit (thus increasing the burden on the falling incomes of an ever-strained public), its label alone could be a carbon tax’s downfall.

3. Steer clear of arguments referencing the ethics behind action on climate change

When promoting the cap-and-trade legislation, there was much political posturing (particularly in the House, where a bill did pass) that Congress was acting ever-so honourably for the ‘future of our children and grandchildren’. The implication was that Congress was shouldering some short-term cost for the long-term health of the great nation. The problem is, right now, in the current economic climate, no one cares about their unborn and imagined relatives. Why should they, if paying the bills and feeding those mouths that are already present at the table is burden enough? Claims that a carbon tax (or any other policy, for that matter) are for the benefit of a vague future ‘other’ are only going to fall on deaf ears and suggest the further  detachment of the millionaire Members of Congress from the everyday concerns of the ordinary Joe Public. Furthermore, the US is currently so ideologically divided that to assume that any one Member of Congress’ ethics translates into some public cause for action is to misunderstand the increasing political polarisation underway at every level of the American polity. One liberal’s obligation is likely to be another Conservative’s unnecessary burden; whether it’s for the benefit of future generations or not. A carbon tax, then, is not an ethical or moral action - it is a good policy, period.

4. Emphasise the policy; avoid the science

The cap-and-trade legislation became, once again, a platform on which to put the science of climate change publicly on trial. In their determination to establish a robust defence of the legislation on all fronts, the supporters of cap-and-trade engaged – in painstaking detail – in a description of the scientific foundations of the legislation, graph by graph, figure by figure. Of course, the opposition did the same (with Senator James Inhofe particularly enjoying the opportunity) and found it wanting. Instead, any proposals for carbon tax legislation must do the opposite; ignore the science, stress the policy. The designers must abstract the policy from its scientific roots and stress the reasons for enacting it in purely policy terms; terms that the policymakers within Congress are actually qualified to evaluate rather than the poorly conducted pseudo-scientific review that took place in 2010. That is not to say that the policy should not be based on the best, soundest, most rigorous scientific (and economic) evaluation there is to date - of course it should. But when it comes to legislative debates on a carbon tax - and the rhetorically-driven stage that is the floor of both chambers of Congress - check the science at the door.

Passing any comprehensive climate change legislation in the US Congress has, to date, proved to be an impossible task. This does not mean it will always be so. The policy has to be based on the best evidence, the political context must be forgiving, and there must be a political figurehead willing to stake their future career on an issue that is neither particularly salient nor promises any short-term electoral gains. This context is difficult to engineer and unlikely to occur left to chance. Above all, though, supporters of a carbon tax must get the message right. On this front, as much as any other, they failed with the cap-and-trade legislation. If they learn the lessons of that fiasco maybe – just maybe – the US Congress may finally step up to the plate and enact legislation which makes real, tangible, and significant inroads on the path to reducing the emissions of the world's greatest emitter. We wait, once again, with bated breath.

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