Make polluters pay and give Washington consumers a choice | Opinion

If only we could eliminate the impacts of climate change by simply ignoring them.

By eliminating the Social Cost of Carbon from any Federal permitting or regulator decision, the Trump Administration is trying to do just that with its January 20, 2025 Executive Order, Unleashing American Energy, and with his recent order to federal agencies to ignore the economic damage caused by climate change when writing regulations.

Never mind the impacts of U.S. carbon dioxide emissions on global sea level, mountain snowpack, irrigation water, wildfires and smoke, summer heat waves, and on hurricane winds and flooding.

Never mind the same impacts of carbon emissions by other countries (which the U.S. cannot complain about unless it does its part in reducing them).

Never mind the impacts of emissions by this generation on future generations, or the impacts of emissions by globe-trotting wealthy elites on the poor people living in flood plains and industrial refinery zones.

If we just ignore all of those impacts, then they don’t exist, right?

I appreciate the Trump administration’s call to give industry, consumers, businesses, and governments choices on how electricity, steel, concrete, and fertilizer are produced, on how people and goods are transported, on heating and cooking appliances, and on lighting, but only if the impacts of the emissions associated with all choices are included in their cost. Make polluters pay.

Making polluters pay is a simple but powerful concept that corrects for the failure of the market to account for the impacts of pollution.

If we make polluters pay, we don’t need many of the complicated regulations that take away choice.

But how much should polluters pay? If polluters pay according to the impacts of their pollution, then they are paying for the impacts, as they should.

Who are polluters? Are they fossil fuel companies, or the utilities that use coal or natural gas to produce electricity, or are they consumers, businesses, or governments? They’re all of the above.

If the payment for pollution is taken from fossil fuel companies at the point of extraction, in proportion to the carbon content of the coal, oil and gas, the fossil fuel companies will pass that cost on to their customers: utilities, consumers, businesses, organizations and governments.

But who should get the proceeds of the payment? Those who are impacted, of course, because the payment is for the impacts.

Recipients of the proceeds shouldn’t be limited to those who suffer directly from the impacts, because they are often compensated by property, medical and life insurance, and by federal, state and local disaster relief.

Those who pay premiums for insurance and taxes for disaster relief should also be compensated. So, that includes just about everybody.

But because much of the emitted carbon dioxide stays in the climate system for decades, prolonging the impact of the emissions, some of the suffering won’t happen for decades. So, future generations should also be compensated.

Rather than establish a complicated system of reimbursing victims now and in the future, according to how much they are impacted, compensation could be simply distributed to everyone at the time of fossil fuel use.

Give everyone an equal monthly share of the revenue from a price on carbon: a carbon cashback. While heavy polluters will pay much more in carbon tax than they’d get in their carbon cashback, most people would break even or come out ahead.

The Social Cost of Carbon is essentially the way that a fair price on carbon is established.

Although an appropriate value of the Social Cost of Carbon is rather uncertain, that uncertainly should not be an excuse to ignore it altogether.

Setting a value of zero, as the Trump Administration is trying to do with its executive orders, does not eliminate climate impacts.

If instead we use a realistic estimate of the Social Cost of Carbon to establish a nationwide price on carbon, with the revenue distributed evenly to all legal residents, we can eliminate the need for complicated regulations and expensive subsidies intended to achieve the same purpose of reducing emissions, with the added advantage of preserving consumer choice and protecting the pocketbooks of people who don’t pollute as much as heavy polluters.

The price on pollution will send a market signal that will drive down carbon emissions.

Other countries can do the same. That is how to eliminate the impacts of climate change.

This story was originally published May 16, 2025 at 5:00 AM.