Economic policy

Reviews | The need for a green economic policy

Carbon dividends and investments in green technologies will give us a CO2 advantage.

Jeff Sigmund

A group of people pose for their portraits and to show their signs Wednesday, March 31, 2021. Iowa Citizens for Community Change held the rally on the Riverside Dr.


If the government ultimately wants to mitigate the impacts of climate change, it must find a way to incentivize people to adopt sustainable practices. Fortunately, there is a strategy for this: implement carbon dividends and increase investment in clean energy.

In Iowa City, June was the hottest month on record and July was anything but colder. Forty percent of the state is experiencing a severe drought, which has resulted in degraded crop quality across the board, causing severe damage to our agriculture industry.

In addition, the increase in the frequency of climate-related disasters has resulted in billions of dollars damage to towns in Iowa as thousands of people lost their homes in flash floods. Ultimately, climate change affects us all and we need a solution that works for everyone.

In economic terms, carbon dioxide emissions are considered negative externalities because these are social costs that make markets inefficient and the quality of life worse for society.

To combat the negative externality, economists often recommend installing a carbon tax that discourages businesses – and people – from polluting the air with carbon dioxide, forcing them to seek cleaner ways to produce goods and services.

Although case studies have shown that carbon taxes are effective to help deal with climate change, the policies around them are tricky as the policy proposal has still failed to gain traction among the the general populationwho view taxes as regressive.

However, if legislators adopt a carbon dividend, things could turn out differently. Like a carbon tax, a carbon dividend works by levying a charge on polluters. Unlike a carbon tax, however, American families are reimbursed, unlike polluters.

In other words, you get paid not to pollute.

One of the most popular plans discussed in political circles is the Baker-Schultz climate plan, which would fine businesses and individuals $40 per tonne of carbon polluted and increase by 5% per year above inflation. It would end up cutting emissions in half by 2035 and putting $2,000 a year in the pockets of American families, which is a win-win for everyone.

Of course, like any market-based solution, some climate activists have found climate pricing systems insufficient and are instead arguing for the passage of the New Green DeaIa proposal that asks the United States to revolutionize the economy by becoming a net zero emitter by 2030.

The problem with the Green New Deal is that there are no real political proposals in the plan to fight climate change. Instead, when the authors talk about “transforming the economy”, they are vague calls increase access to single-payer health care, end oppression and strengthen unions.

While all of these ideas are great, they really have no direct link to climate change mitigation. On the other hand, carbon dividends are directly focused on the fight against the existential crisis.

On the other hand, what the Green New Deal people have understood is that we need to make our infrastructure green, which brings us to the second part of the climate change strategy.

of President Joe Biden American plan for employment aims to achieve this by investing billions of dollars in replacing coal-fired power plants with clean ones; encouraging people to buy electric cars while electrifying public transport; make homes energy efficient; and participate in the preservation of the environment.

By investing in green technology, Biden hopes to take the first steps towards making the United States 100% carbon-free by 2050, an ambitious but practical goal that is within reach.

There is no miracle solution to climate change. We are now faced with the repercussions of uncontrolled man-made pollution over the past 200 years. Fortunately, we have the solutions needed to solve this crisis. Our legislators just need to be bold enough to implement them.


The columns reflect the opinions of the authors and are not necessarily those of the editorial board, The Daily Iowan, or other organizations with which the author may be involved.