A Carbon Price is a Bet America Needs to Make

May 26th, 2010

by and


This piece was originally posted on Huffington Post.

China today is driven by one number: eight. That’s the annual percentage growth in GDP China needs to lift the more than one-third of its population still mired in poverty into the middle class. That’s 600 million people in a country of 1.3 billion.

And how does China plan to do this?

China is betting heavily—and correctly so far—on clean energy. One part of the strategy now under strong consideration is placing a price on carbon within the next five years.

This may seem counterintuitive for a country requiring 8 percent annual GDP growth. In the United States, opponents of clean energy describe a price on carbon as economic Armageddon. But sober economic analyses show that China is onto something. We reviewed more than two dozen academic, private sector, financial and government studies spanning the last three years. Our report, “Putting a Price on Success: The Case for Pricing Carbon,” found that while some sectors of the economy will decline, the net impact of a carbon price on the American economy will be positive.

That’s because the same opportunities that are driving China to price carbon are there for the taking for the United States. There’s broad consensus that a carbon price will spur the creation of new jobs in clean energy industries and supporting sectors, be a catalyst for investment, keep more money at home, and save companies and consumers billions of dollars in reduced energy bills through encouragement of efficiency.

This shouldn’t be mistaken for blind optimism—the losses in older energy sectors will be real, but they simply will not have a major impact on an economy as big and diverse as ours.

This is the bet China is close to making. And if we don’t make it ourselves, a bad economic situation will get worse. Over the past decade, the United States has lost its lead in solar panel manufacturing to China, is close to losing its lead in wind manufacturing and is barely out of the starting gate on our nuclear revival, even as China launches an ambitious plan to expand its nuclear power production.

Don’t just take our word for it—American companies want the predictability that a carbon price will bring.

As Ford Motor Company Vice President Sue Cischke explained, “Without a cohesive national energy and climate policy that places a price on carbon, we could be caught in a cycle of starting and stopping technology development. That is simply not good policy or good business.”

The more than 20 reports we analyzed would agree with Ms. Cischke. To get our economy growing, to get America running on clean energy, we need a price on carbon.