We need an insurance policy for climate change
© Greg Nash

On Sept. 25, Rhode Island Sen. Sheldon WhitehouseSheldon WhitehouseDemocratic senators ask DOJ watchdog to expand Giuliani probe Democrats pan Trump's budget proposal as 'dead on arrival' Trump unveils .8 trillion budget that backtracks on deal with Congress MORE (D) detailed his plan for combating climate change in the United States: put a price on the main instigator, carbon dioxide.

Whitehouse is the sponsor of legislation that would put a fee on greenhouse gas emissions nationwide. This bill, the American Opportunity Carbon Fee Act, would charge the equivalences of the Obama administration's estimated "social cost of carbon," $45 per ton of carbon dioxide/equivalent emitted. The beauty of this proposed legislation is that it would not increase the size of the federal government. All revenue collected from this fee, around $2 trillion in 10 years, would be returned to the American public through corporate tax cuts and rebates to consumers, making it revenue neutral. The goal here is to make polluting industries more accountable for their impact while giving the incentive to reduce emissions.

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Speaking to a group of CEOs and leaders of businesses groups in Boston, the senator spoke on the importance of businesses engagement for getting Republicans to support climate action: "How do we break Republicans free from the [oil sector]? You get the corporate sector to stand up for climate action." Since the Citizens United ruling, Whitehouse argued, "it has been impossible to get the GOP involved in climate action."

This talk of pushing Republicans to support carbon pricing struck me as odd. Especially since the idea of emissions pricing started with a Republican — the most famous modern Republican for that matter, President Reagan.

This idea of market-based solutions was born out of the Reagan administration. John Henry, a Washington businessman, recalls a Reagan administration lawyer, C. Boyden Gray, floating the idea of cap and trade on a hike in Maine one summer in the 1980s. Former Reagan Secretary of State George Shultz praised carbon pricing in his 2008 op-ed: "Put a price out there, and let the marketplace adapt ... it's the Reagan way." It was this basis for the thinking, an "insurance policy" for the environment, that led to the Montreal Protocol in 1988, history's most successful environmental treaty. And this tradition continued.

Other conservatives have praised such proposals in the past. Henry Paulson, Secretary of the Treasury under President George W. Bush, came out in support in 2014, saying: "We're staring down a climate bubble that poses enormous risks to both our environment and economy. ... The solution can be a fundamentally conservative one. ... We can do this by putting a price on emissions of carbon dioxide ... [unleashing] a wave of innovation to develop technologies, lower the cost of clean energy and create jobs."

When acid rain become a national issue in the '90s, it was the George H.W. Bush administration which supported cleaning it by developing implementing another market-based scheme — cap and trade on nitrogen oxide and sulfur oxide emissions. The simple truth of it is that we have priced pollutants before, and it has had resounding results.

Businesses can take the lead on pushing for these market-based solutions. Gilbert Metcalf, professor of economics at Tufts University, also spoke to the same room of business leaders as Whitehouse, saying: "We are missing an opportunity not using the market to correct for greenhouse gases." And business leaders across the country have started to notice that opportunity.

In Massachusetts, a growing initiative of CEOs and industry executives have banded together to push for smart climate change policy. Businesses Leaders for Climate Action support a similar bill by State Sen. Michael Barrett (D) that would price carbon on a statewide level. The funds would be used in a similar way to Whitehouse's bill. Revenue collected would be redistributed to businesses and consumers, making the bill effectively revenue neutral. A study done by the Massachusetts Department of Energy and Resources found that would it stimulate job growth and reduce emissions especially in the service sector.

Businesses have an opportunity to take the lead from states on climate change. State action has been the bedrock of driving national conversations. From gay marriage to healthcare, national policy has started in the what has been called the "incubators of America" — the state legislatures. Carbon pricing initiatives have popped up in six other states, with New York being the latest. Businesses building the grassroots for future movements can be how climate change will be dealt with in America.

A typographical error in this piece has been corrected.

Green is the executive director for the Climate Action Business Association (CABA), a Boston-based coalition of businesses taking targeted action on climate change. As an activist, Green has played strategic roles in several of the largest national, as well as international campaigns dedicated to fighting climate change. Since 2012, he has served as a representative to the United Nations focusing on international climate science and policy. He also serves as the chairman for the ASBC's Committee on Energy and Environmental Policy.