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Far right warms to carbon tax

An influential right-wing think tank has released an energy policy proposal that includes support for an American carbon tax.

The American Enterprise Institute proposal -- co-written by AEI’s Steven Hayward, Brookings’ Mark Muro and the Breakthrough Institute’s Ted Nordhaus and Michael Shellenberger -- calls for a $5 per ton carbon tax, with the proceeds to be invested in energy research.

On the right-wing blog Frum Forum, author Tim Mak writes:

Perhaps the most striking thing is that a conservative think-tank has signed on to a proposal that includes an increase in taxes.

“That’s the thing I’m least enthusiastic about… [but] any new spending program has to be paid for by a revenue source. These are deficit conscious times,” explains Hayward to FrumForum. “If it’s not a carbon tax, then it has to be cutting subsidies, or higher oil and gas royalties.”

The authors argue in their paper that the $25 billion per year federal investment is necessary because private industry is dedicating too little money to research and development. The energy sector only devotes 0.3% of domestic sales to R&D, compared to industries driven by innovation, such as communications (25.6%), software (15.1%) and pharmaceuticals (11.9%).

Hayward told FrumForum that although market-oriented individuals may shudder at the thought of this type of federal intervention, the energy market isn’t currently free.

“The oil market is dominated globally by state-owned oil companies, which means that the marketplace is vulnerable to political manipulation… because it’s not a perfectly free market, I think it’s not sufficient to say ‘oh, just let the market take care of it’ and do nothing,” says Hayward.

The policy paper is labeled as ‘post-partisan’, but Hayward admits that many Republicans still don’t view climate change as being man-made, or a problem worth addressing.

The American Enterprise Institute policy paper flowed from an effort that started with a book written by Ted Nordhaus and Michael Shellenberger, Break Through: From the Death of Environmentalism to the Politics of Possibility.

Monte Paulsen reports on carbon shift for The Tyee.

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