Implementing an economy-wide price on carbon through the Price and Block Grant approach is one of the most efficient means of raising revenue and reforming U.S. tax policy while remaining consistent with the conservative principles of limited government and local control. It is also a far more cost-effective way to reduce U.S. carbon emissions than the top-down approach taken by Obama’s EPA in regulations such as the Clean Power Plan.
In particular, carbon pricing offers an attractive mechanism to raise revenue for massive new investments in U.S. infrastructure, adopt substantial pro-growth tax reforms, shield American industry from potential border adjustments and promote the ongoing transition to a clean and competitive economy.
While many details of such a scheme will have to be worked out, and several tough questions answered, putting a price on carbon and returning the revenue back to states builds on the strength of the U.S. federalist system. It eschews top-down federal regulations in favor of a market-based approach, promotes efficient and sound environmental policy and puts local actors in charge of key spending decisions. It is simply smart policy.