Reagan-Era Secretary of State Calls for Carbon Tax

Having served as Secretary of State during former President Ronald Reagan's two terms in office, George P. Shultz made a rare appearance on Capitol Hill March 8, urging Congressional legislators to overcome partisan divisions and take strong action on climate change.

An advisory board member of Partnership for a Secure America (PSA), Shultz and PSA executive director Andrew Semmel emphasized the links between climate change and national security, which they noted “has become increasingly well-recognized as a 'threat multiplier' in the security community.”

Climate change, national security & the energy revolution

Addressing a standing room-only crowd on Capitol Hill, Shultz stressed a pressing need for Congress to take strong, consistent action in support of climate change mitigation and adaptation initiatives. The revolution taking place in the energy sector was another recurring theme in Shultz's address to members of Congress.

“I believe, and I think there’s a very good case to be made, that we here in the United States are on the cusp of a true revolution in the field of energy, and if we can capitalize on these opportunities we’ll have a much better energy future from the standpoint of our national defense, from the standpoint of our economy, and from the standpoint of our environment,” according to a transcript from PSA.

Overcoming partisan politics

Calling to mind the staunch political resistance in Congress to taking strong actions to mitigate and adapt to climate change, Shultz stated, “I know I read particularly on Capitol Hill there are a lot of people who think that science is not sufficient and so on. But there’s a man named Gary Roughead who retired a year or so ago as chief of naval operations so he knows something about oceans. And he’s now out at Hoover at Stanford. He showed [a film]...of the Arctic, an ocean is being created that wasn’t there before. How could that be? It can only be because it’s getting warmer, there is no other explanation.

“And if you look at the chart on the way in which the sea ice has been disappearing, the most stunning thing in it is how in recent years suddenly there has been a shift. And the discontinuities are the thing you have to watch out for. Because something may come and hit you faster than you believe because of the operation of the discontinuity."

Lessons from the recent past

Shultz cited his experiences during the Arab oil embargo of the early 1970s and the realization during the 1980s that the ozone layer was being depleted – which led to the UN Montreal Protocol banning use of ozone-depleting chemicals – as indicative of the crises we now face and the success of previous administrations and Congressional members to address them.

“Back in the mid ’80s, I am Secretary of State. And scientists are pointing out that the ozone layer is decreasing. And there’s controversy. There’s some who doubt. I did. They all agreed that it happens, it’s a catastrophe. So I always had twice a week private meetings with President Reagan and we talked about this and he decided we should take out an insurance policy. And so we negotiated what was called the Montreal Protocol.

“It turned out that the scientists who were worried were right. And the Montreal Protocol ...what I learned from that is if you wait till you’re boiling you may have missed your moment. You have to look and see what’s happening and act on the basis of that.”

What Congress can do now

Shulz cited several actions Congress can take now to assure a better, healthier and more sustainable economy, environment and society:

Enact a revenue-neutral carbon tax:
“Part of the cost of energy is the carbon that’s produced. And it’s particularly something to worry about because it has a lot to do with the climate problem that we’ve been talking about. So how can you possibly create a playing field by taking a step that makes all forms of energy bear not only their immediate costs of production but bear the cost of the pollution that they emit? Some produce nothing, like nuclear power. Others produce a lot. So my proposal is to have a revenue-neutral carbon tax.

“As an economist I prefer a tax to a cap and trade system because it’s an old-fashioned straightforward way, there it is, and it’s obvious that what you tax you get less of. That’s well known. And so that’s the way I would go about it. I would start small and have a legislated scheduled increase. And why revenue-neutral? Because I want this to be justified and thought of solely and only as a way of leveling the playing field.

Shultz favors a transparent, revenue-neutral carbon tax in a fund paid out to the populace.

In fact, a discussion draft of such a carbon-pricing bill was just introduced in the House and Senate.

Eliminate energy subsidies: Shultz also favors eliminating energy subsidies. “I would wipe them out. Let everybody compete on a level playing field."

He also called for sustained support for energy research and development (R&D), a stance that falls right in line with President Obama's efforts to foster a wholesale transition to a low-carbon, clean energy economy and society.

“I think when the government has a good level of support it tends to encourage industry to come in too. And if suddenly the government stops that’s a big signal. And it’s a very undesirable signal. So this is really important,” he commented.

Global Warming: a threat to national security
Shulz's stance on U.S. energy policy stance also falls right in line with Pres. Obama's recent national address on U.S. energy policy in which he called for the establishment of a $2 billion Energy Security Trust and for all U.S. federal government agencies to factor climate change into all project and program reviews.

The latest research results from the global community of climate scientists working under the UN Intergovernmental Panel on Climate Change (IPCC) and UN Framework Convention on Climate Change (UNFCCC) indicate it's virtually assured that global mean temperature will increase more than than 2°C over the course of the 21st century given current levels of fossil fuel consumption and forecast increases. A recent World Bank report warns that human carbon and greenhouse gas emissions put us on on track for global warming of 4°C.

While taking a geopolitically and technologically “pragmatic” near-term perspective on U.S. energy policy, Shultz foresees a transition to a clean energy system, economy, and society over the longer term.

“I think where much of this research will bear its greatest fruit is in improving the quality of our environment,” he stated. “Because after all if you save the use of energy, that’s clean energy.

In summary, Shultz returned to the insurance policy metaphor, urging policy makers to take steps to avoid the worst of global warming's impacts.

“I think it’s essential that we apply the insurance policy, Ronald Reagan’s insurance policy concept, to our present circumstances. Because a lot of us think... that the globe is warming. And we should be taking steps to do something about that,” Shultz said.