Hank Paulson: We Need Carbon Tax to Protect Economy

Tuesday, 24 Jun 2014 07:55 AM

By Dan Weil

Many Republicans oppose a tax on carbon dioxide emissions to combat climate change. But former Treasury Secretary Henry Paulson isn't one of them.

In a New York Times opinion piece, he compares the government's current handling of climate change to its handling of the financial system prior to the 2008 crisis.

"For too many years, we failed to rein in the excesses building up in the nation's financial markets," writes Paulson, now chairman of the Paulson Institute at the University of Chicago.

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"We're making the same mistake today with climate change. We're staring down a climate bubble that poses enormous risks to both our environment and economy."

And Paulson isn't shy about chiding members of his own party. "We need to act now, even though there is much disagreement, including from members of my own Republican Party, on how to address this issue while remaining economically competitive."

So what's the best way to do that?

"The solution can be a fundamentally conservative one that will empower the marketplace to find the most efficient response. We can do this by putting a price on emissions of carbon dioxide — a carbon tax," he argues

"A tax on carbon emissions will unleash a wave of innovation to develop technologies, lower the costs of clean energy and create jobs as we and other nations develop new energy products and infrastructure. This would strengthen national security by reducing the world's dependence on governments like Russia and Iran."

Meanwhile, the Obama administration's plan to control carbon emissions, announced earlier this month, "more or less orders states to adopt cap and trade or a carbon tax," according to a Wall Street Journal editorial.

The paper's editors aren't impressed. "The EPA [Environmental Protection Agency] claims that by some miracle the costs of this will be negligible, or even raise GDP," they write. "But it is impossible to raise the price of carbon energy without also raising costs across the economy."


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