Three points for Cliff Bentz

Oregon Senator Cliff Bentz, R-Ontario, the co-vice chair of the Joint Interim Committee on Carbon Reduction recently told the Oregonian’s Ted Sickinger that:

It’s a waste of time to argue about the existence of climate change. The planet is warming, he said, and we need to adapt. His worry is that a cap-and-trade system won’t work. “There is going to be a cap and trade bill,” he said. “I can’t stop it. I’m at the table trying to make the package less damaging to Oregon.”

Here are three specific goals for him to target his efforts:

1. Shift the momentum away from cap and trade toward a carbon tax. A tax directly gets economic agents to pay for carbon’s negative externality. The right amount of carbon to emit should not be determined by arbitrary caps but rather by the amount of carbon that still makes economic sense to emit after people pay the tax.
2. Use the Obama administration’s estimate of the social cost of carbon at the 5% discount rate. Environmental extremists like to inflate this number by using a lower rate, disingenuously manipulating the time value of money. Five percent is still probably lower than the true opportunity cost of capital, but it’s reasonable. If we’re going to stipulate carbon as a pollutant, then let’s only tax it at the rate mainstream economics estimates the net-present harm to be. If the Democrats want to put a price on carbon that’s higher than $40 per metric ton, then make them the ones marginalized as being unscientific.
3. Make it revenue neutral. Even if the true social cost of carbon were zero, taxing it is ultimately just a flat consumption tax. That’s probably less harmful to the economy than our progressive income tax; so if our state’s income tax could be reduced proportionately there will effectively be little net damage to the Oregon economy. Or since Democrats are trying to raise revenue, and there’s little you can do to stop them, a de facto form of revenue neutrality is to require this new money to go to the general fund, not a green energy slush fund. Once carbon is priced in Oregon’s economy, that’s the only help alternative energy producers should need. Anything that still cannot compete with fossil fuels at that point is socially inefficient, according to mainstream environmental economics.

When Oregon Democrats argue against these three points, you can quote William Nordhaus in your defense, the 2018 winner of the Nobel Prize in Economics. There are many people in this state who would never even think of voting for a Republican but who still would prefer a more rational carbon policy than the disastrous proposal from the last legislative session.

Eric Shierman lives in Salem and is the author of We were winning when I was there.