The Lincoln Plan about climate change

Climate change is a complex issue, but it can be summarized rather simply: the consensus of science is that global warming is a threat (1); the consensus of economics is that a carbon tax would be a cost-effective remedy (2). A carbon tax is a charge for emitting carbon dioxide (CO2), the main heat-trapping culprit.

For the last several years Ecological Internet has proposed a small U.S. government federal charge initially of $5 per ton of carbon emitted as CO2, which for gasoline is about 1 cent per gallon. Since Lincoln's portrait appears on both the penny and the $5 bill, the plan goes under his name - the "Lincoln Plan". A fundamental question in addressing climate change is whether cap-and-trade or a carbon tax would be more cost-effective. For a discussion of this matter, please see the following articles: Limiting Carbon Dioxide Emissions: Prices Versus Caps and After Kyoto: Alternative Mechanisms to Control Global Warming.

$5/ton is a very good starting point for a carbon charge - it would allow implementation mechanisms to be developed, and is modest enough to be politically achievable. Most of the revenue from the tax would be used to pay for measures to reduce CO2 emissions such as conserving forests, increasing energy efficiency, and adopting cleaner energy supplies.

As a stepping-stone to a $5 carbon tax, the U.S. Congress could give the public discounts on such things as compact fluorescent lights and 100 mpg vehicles. The cost would be about $1.5 billion. Congress could also announce that once a tax (or cap) was passed the discounts would be tripled. So most households could easily make more money on rebates and energy savings than the tax would cost them.

The size of the charge could then be increased as needed. Extra revenue from a charge over $5/ton would be used mostly to lower other taxes -- the plan would tax pollution rather than employment and savings.

From $5/ton, the carbon price could rise $10 a year for six or seven years, and $5 a year after that. By 2015 the charge would reach $75/ton of carbon, or about $20/ton of CO2. This is around 20 cents per gallon of gasoline and 2 cents per kWh of electricity from traditional coal-fired plants. A price trajectory such as this would appear to be reasonable. And it would greatly speed up the adoption of current low-carbon technologies and the development of new ones.

Further boosting the plan's attractiveness would be its considerable side benefits. Saving forests, particularly tropical forests (3) would help safeguard the majority of Earth's species; efficiency gains could save us a lot of money (4) while reducing dependence upon overseas sources of energy; and moving to cleaner energy supplies would reduce harmful pollutants of many kinds. Indeed, these ancillary benefits are so large that the plan would be worth trying even apart from its core benefit of climate protection.

Sensible climate protection should, indeed, be profitable. As Amory Lovins writes, "If properly done, climate protection would actually reduce costs, not raise them. Using energy more efficiently offers an economic bonanza...because saving fossil fuel is a lot cheaper than buying it."

In short, the Lincoln Plan could handle a serious problem with great effectiveness and at low, even negative, cost. Those who would like to contact a legislator or write a letter to the editor in support of the plan may forward this page or quote from it as they wish.

UPDATE, 2008
It now seems advisable to ramp up the carbon price more quickly than was envisioned above--perhaps $5 per metric ton of CO2 (about 5 cents a gallon of gas) for the first year; $10 for the second and third years; and $5 for the fourth. This builds on British Columbia, Canada's schedule of $10,5,5,5, and 5.