US economists led by former US Federal Reserve chair Janet Yellen are uniting in record numbers to back the idea of a carbon tax as the most effective and immediate way of tackling climate change. At a time when Democrats including New York congresswoman Alexandria Ocasio-Cortez are pushing a sweeping “Green New Deal” programme to reduce greenhouse emissions, climate change is shaping up to be a major 2020 election issue. The US is the world’s second-biggest emitter of carbon dioxide, behind China. But Ms. Yellen told the Financial Times the Green New Deal was costly, whereas the carbon tax, which would plow proceeds back to the public in dividend payments, would be the “most efficient way” to reduce emissions.
“Global climate change is a very serious problem and it calls for immediate national action,” she said. “If you were to start around $40 a ton and then raise this over time, by more than the rate of inflation, this would be a very effective way of reducing carbon emissions and would more than meet the Paris commitment.”
The carbon tax proposal, organized by the Climate Leadership Council, is a bipartisan effort that has united senior economists from both parties, and now garnered 3,300 signatures from professional economists and academics across the US.
That surpasses previous petitions across the US analysts’ community, such as the 1997 Economists’ Statement on Climate Change, which received 2,600 signatures, and the 1930 Economists Against Smoot-Hawley. Ms Yellen said a carbon tax and dividend would be more “feasible” and “sensible” than the Green New Deal in its current form. “This is a plan that harnesses markets, it is much more efficient and less costly than methods proposed by the proponents of the Green New Deal,” she said. Under the terms outlined in the statement, which was first published a month ago, the revenue from a carbon tax would be redistributed to Americans on a per capita basis, which would disproportionately benefit the poorest households more.