Report: US should follow Australia's lead by taxing carbon

Still, the Australian tax has hardly been popular. Australian Prime Minister Julia Gillard embarked on an “election-style campaign” in support of the measure as her approval ratings hit near-record lows, Reuters reported Monday.

Economics could yet provide a push for pricing carbon in the United States, Meltzer suggested; the prospects of becoming a major liquefied natural-gas and coal exporter greased Australia’s drive to tax carbon emissions, he said.

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“Similarly, as the U.S. becomes an LNG exporter — and possibly expands its exports of coal — the relationship between domestic climate change action and U.S. energy exports should feature more prominently in its climate change debate,” he said.

Australia and the United States rank No. 1 and 2, respectively, in greenhouse gas emissions per capita. Australia is about the same size as the contiguous 48 states, which means the two nations share transportation, business and government infrastructure characteristics.

Energy specs bond the two as well, Meltzer said. The splits in greenhouse gas emissions by sector — electricity, transportation, commercial and residential, industry and agriculture — match fairly well. Both rely heavily on coal for electricity, and little appetite exists in either locale for nuclear plants.

Meltzer made one other observation about the lessons the United States could learn from Australia’s political battles over carbon pricing: “[T]he key lesson from Australia’s political battles over carbon pricing: a strategy that seeks to reach agreement amongst key stakeholders only — what in Washington would be considered an inside-the-Beltway strategy — will likely fail.”

Given the current state of congressional affairs on climate change, perhaps Meltzer should have started with that.

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