"From a businessman's standpoint, that's what is going to compel action," Duke Energy Chairman Paul Anderson said at a Sierra Club workshop here on what to do about global warming.
Debate in Congress has swung in the last year away from the administration policy of voluntary emission cuts to having government impose mandatory caps and allowing industry to trade emission rights under a ceiling that is lowered year by year.
These cap-and-trade schemes are at work in Europe and have drawn backing among several U.S. electric utilities and other large emitters of greenhouse gases. But Anderson says the big selling points of cap-and-trade are the problem: It's too flexible, too slow and too prone to "political mischief" in exempting one industry or another.
But taxing carbon emissions will produce immediate, economywide gains in energy efficiency and new, carbon-free energy production, Anderson said.
"All the other approaches will take decades. A carbon tax is immediate," he said. Governments could use the revenues to offset or refund other taxes, as well.
"Assuming it's a tax-neutral policy, it's really no-regrets policy," Anderson said, "because at the end of the day even if you don't agree climate change is a serious problem, all you've done is create some energy efficiency out there and that's not a bad thing."
Former Vice President Al Gore, another member of the Sierra Club panel on global warming solutions, would go further.
"I think we ought to reduce employment-based taxes down to almost zero and replace them with pollution-based taxes," Gore said. He acknowledged the idea "sounds impractical" but said that taxing jobs to pay for welfare, health care and other government services is placing the nation at a competitive disadvantage.
Greenhouse gas emissions and other pollutants are "wrecking the planet," he said, so taxing them is "logical."
Carbon taxes are popular among economists who, like Anderson, say the taxes convey the clearest market penalty for using energy and technologies that contribute to global warming.
As a practical matter, cap-and-trade systems usually apply to power plants, refineries, cement plants and other major, stationary sources. Industries can pass those costs along or not. The taxes are seen as more democratic, spreading the burden of going carbon free to all fossil-energy users.
But Congress is wary of explicitly adding to energy costs.
Sen. Barbara Boxer, another panelist and incoming chairwoman of the Environment and Public Works Committee, has pledged to push for global warming legislation in the new Senate, with a cap-and-trade system as its centerpiece.
But she doesn't see much chance of selling colleagues on a carbon tax. "I don't think it's pragmatic," she said. "I think a price on carbon is a good idea, but not a tax. I think it's sort of dead on arrival."
For now, it costs nothing to release the gases that are changing Earth's atmospheric chemistry and trapping more heat at the surface. According to the panelists assembled by the Sierra Club, the key to curbing those emissions is tacking a cost onto them.
If carbon taxes make lawmakers cringe, policy wonks are hard at work on more imaginative carbon-pricing schemes. In Britain, it's the carbon credit card. Swipe it when you fill up the car or take a flight. It debits your allotment of carbon credits.
Whatever the method, said venture capitalist Vinod Khosla, putting a price on carbon will bring private investment flooding into energy efficiency and new energy technologies.
"The main thing that can happen is the right pricing signals from government," he said. In the long run, "there will be less government money but 10 times the money from Wall Street because there's a signal. The signaling is very important."