Report: US should follow Australia’s lead by taxing carbon

Following Australia’s lead to price carbon pollution could prove more effective to reduce greenhouse gas emissions than the regulatory tactics employed in the United States, according to a report from the nonpartisan Brookings Institution think tank.

Australia’s carbon tax — about $23 per ton in U.S. dollars — went into effect Sunday, and U.S. policymakers would be wise to observe the experiment, Joshua Meltzer, global economy and development fellow at Brookings, said in his report. That tax will rise 2.5 percent annually until July 1, 2015, when the continent will switch to a cap-and-trade system.

Australia and the United States share many traits regarding greenhouse gas emissions, Meltzer said. Australia wants to bring its emissions totals to 5 percent below 2000 levels by 2020, whereas the United States is striving to achieve 17 percent below 2005 levels by that same year.

Rather than tax carbon, the United States will attempt to meet its mark through a menu of regulatory measures such as the Environmental Protection Agency’s recently approved carbon dioxide emission rules, vehicle fuel efficiency standards and energy efficiency efforts.

Still, the Australian tax has hardly been popular. Australian Prime Minister Julia Gillard embarked on an “election-style campaign” in support of the measure as her approval ratings hit near-record lows, Reuters reported Monday.

Economics could yet provide a push for pricing carbon in the United States, Meltzer suggested; the prospects of becoming a major liquefied natural-gas and coal exporter greased Australia’s drive to tax carbon emissions, he said.

“Similarly, as the U.S. becomes an LNG exporter — and possibly expands its exports of coal — the relationship between domestic climate change action and U.S. energy exports should feature more prominently in its climate change debate,” he said.

Australia and the United States rank No. 1 and 2, respectively, in greenhouse gas emissions per capita. Australia is about the same size as the contiguous 48 states, which means the two nations share transportation, business and government infrastructure characteristics.

Energy specs bond the two as well, Meltzer said. The splits in greenhouse gas emissions by sector — electricity, transportation, commercial and residential, industry and agriculture — match fairly well. Both rely heavily on coal for electricity, and little appetite exists in either locale for nuclear plants.

Meltzer made one other observation about the lessons the United States could learn from Australia’s political battles over carbon pricing: “[T]he key lesson from Australia’s political battles over carbon pricing: a strategy that seeks to reach agreement amongst key stakeholders only — what in Washington would be considered an inside-the-Beltway strategy — will likely fail.”

Given the current state of congressional affairs on climate change, perhaps Meltzer should have started with that.

back to top