With the 2020 election only a year away, a number of Democratic candidates have released their plans to address anthropogenic climate change. Given the level of attention drawn to climate change by Democrats in recent years, this is no surprise. What may be a surprise is that in the last few years, some influential Republicans have also produced plans to address carbon emissions. The most influential of these, particularly on college campuses, is the Baker-Schultz Carbon Dividends plan. This Republican plan is a step toward bipartisan support for climate change solutions, but an examination of the bill’s sponsors and content reveals some concerns.
The plan has four pillars. The first is to set a fee on carbon at $40 per ton (which is below the “social cost of carbon” estimated by trusted institutions like the World Bank and Environmental Defense Fund). This fee would increase by 5% each year. The second pillar redistributes the proceeds of the fee equally to all Americans. The third removes other emissions restrictions that would no longer be “necessary,” and the fourth would set “border carbon adjustments” on imports based on their carbon content. The fourth pillar is an intriguing new idea and could perhaps solve the issue of different countries acting as free riders on the issue of carbon emissions by incentivizing international cooperation, but it seems difficult to implement in practice.
The co-authors of the plan are two former Secretaries of State: George Schultz and James Baker, neither of whom is an expert in economic policy or environmental policy. In recent years, Schultz’s decision-making skills have come under scrutiny because he was one of the biggest supporters of Elizabeth Holmes’ fraudulent medical-device company, Theranos. In the context of climate issues, though, Baker’s past is far more concerning. In 2017, the year the pair first released their plan, Baker gave a speech at a think-tank summit where he explained that the plan was not inspired by his conviction that climate is real, but rather as a backup plan “just in case Al Gore turns out to be right.” He also said, “I don’t understand the climate debate,” and “I am anything but a climate scientist. I don’t know anything about it.” While most people who write legislation are not climate scientists, it seems strange that someone writing a piece of legislation designed to prevent damage to the climate would not “know anything about” climate science.
While Baker does not have experience in climate science, he does have experience working in the oil and gas industry, specifically at Enron. His job at Enron began in 1993, almost immediately after his tenure as George H.W. Bush’s Chief of Staff ended. A New York Times article from 1993 stated that Baker would “have an opportunity to invest in any projects” he developed at the company. If Enron still existed, it’s plausible that Baker would still be profiting from these investments when writing his Carbon Dividends Plan. Unfortunately for him, the company went bankrupt in 2001, largely due to fraud by its executives (most of whom, like Baker, had held prestigious positions in the United States Government prior to joining the company).
Three months before Baker admitted he didn’t understand climate science, Baker and Schultz formed a coalition called the Climate Leadership Council to endorse, advertise, and financially support their plan. The Council’s members include Shell, BP, Exxon (which paid at least $1 million to the CLC in 2018), and a host of other corporations that profit off of fossil fuels. At first, a carbon tax seems undesirable for these companies because they make almost all of their revenue from selling carbon. If the plan was effective in preventing climate change, it would decrease carbon emissions, and these companies would have less revenue.
Their support may be explained by the fact that while a carbon tax would decrease revenue, other stricter and more proactive policies could decrease revenue even more. The law’s Third Pillar would remove emissions regulations other than the fee: for example, “all current and future federal stationary source carbon regulations” would be “displaced.” This would provide grounds to remove the Obama Administration’s Clean Power Plan, which set specific targets for federal grid decarbonization and provided incentives for clean energy investments. The wording of the Baker-Schultz Plan also leaves open the possibility of removing state carbon emissions laws, such as California’s ambitious cap-and-trade program.
The Baker-Schiltz Plan not only has a suite of oil companies lobbying for it, but also an organization of university students called the Students for Carbon Dividends, or S4CD. The S4CD advocates for the exact same plan as the Climate Leadership Council, and publicizes the exact same four pillars on its website. Unlike the CLC, however, S4CD does not reveal that the plan has been endorsed and backed by oil and gas companies. In fact, it does not even reveal the names of the co-authors of the plan (Baker and Schultz) on its website. Instead, it advertises its own group of founders, which include the University of Arizona and University of Illinois chapters of a nationwide organization called Turning Point USA. Charlie Kirk, the founder of Turning Point USA, may have ironically described his involvement in the climate crisis best during a Fox News interview: “it’s not really about the environment. It’s about the political control that comes with it.” He may be right; not all environmental laws are necessarily written to save the environment.
The history of its sponsors should not be the main indicator of the value of a piece of legislation, but the odd behavior of the organizations and people promoting the Baker-Schultz Carbon Dividends Plan should be taken into account and explained. Even if it is not passed into law, it is likely to influence other bills that come to Congress in the next few years, especially those that are touted as bipartisan. It is always important to appreciate bipartisanship. However, it is also important to consider the fact that not all climate initiatives are necessarily genuine.
Founding Members. (2017). Retrieved November 8, 2019, from https://www.clcouncil.org/founding-members/.
The Carbon Dividends Solution. (2019). Retrieved November 8, 2019, from https://www.s4cd.org/solution.
McMahon, J. (2017, November 2). James A. Baker III: What If Al Gore Is Right? Retrieved November 8, 2019, from https://www.forbes.com/sites/jeffmcmahon/2017/11/02/james-a-baker-iii-what-if-al-gore-is-right/#517357223a15.
Baker and Mosbacher Are Hired by Enron. (1993, February 23). Retrieved November 8, 2019, from https://www.nytimes.com/1993/02/23/business/company-news-baker-and-mosbacher-are-hired-by-enron.html.
Mufson, S. (2018, October 9). ExxonMobil gives $1 million to promote a carbon tax-and-dividend plan. Retrieved November 8, 2019, from https://www.washingtonpost.com/energy-environment/2018/10/09/exxonmobil-gives-million-promote-carbon-tax-and-dividend-plan/?fbclid=IwAR2tNOT7HVbo5Tk4WtvsmH9oaijnvJ-VzHtUC7HaOCTF07_caPxwQZqUIyw.
Fact Sheet: President Obama to Announce Historic Carbon Pollution Standards for Power Plants. (2013, August 3). Retrieved November 8, 2019, from https://obamawhitehouse.archives.gov/the-press-office/2015/08/03/fact-sheet-president-obama-announce-historic-carbon-pollution-standards.
Charlie Kirk calls comparisons between World War II and climate change “despicable” . (2019, June 6). Retrieved November 8, 2019, from https://www.mediamatters.org/charlie-kirk/charlie-kirk-calls-comparisons-between-world-war-ii-and-climate-change-despicable.